Bangkok Airways stock debut reflects tough market conditions but long-term outlook remains bright

Bangkok Airways saw its stock drop by 12% in the first day of trading on 3-Nov-2014 as it completed an initial public offering despite challenging market conditions. Bangkok Airways raised THB13 billion (USD400 million) as it sold 520,000 shares at THB25 (USD77 cents), but the share prices immediately dropped and ended the first day of trading at THB22 (USD68 cents).

The lacklustre debut is likely more a reflection of the difficult conditions confronting the Southeast Asian airline sector rather than Bangkok Airways' long-term outlook. Of the 11 publicly traded airlines in Southeast Asia, eight have seen their stock drop over the past year. Of the six which had IPOs since 2010, five are now trading below their IPO price.

Overcapacity throughout Southeast Asia and political instability in Thailand has made conditions extremely challenging for all of the region's carriers. But Bangkok Airways was one of only a few Southeast Asian airlines that was profitable 1H2014 and enjoys a strong niche due to a unique boutique full-service regional model that relies heavily on partnerships with foreign carriers.