Spirit Airlines delays IPO. European ash fears ease.
US LCC Spirit Airlines has reportedly delayed its planned IPO. The airline announced its proposed listing in Sep-2010, planning to sell 20 million shares at USD14-16 each to raise as much as USD320 million.
- US LCC Spirit Airlines has delayed its planned IPO, which aimed to raise up to USD320 million.
- The funds raised were intended for debt repayment and to pay off Indigo Partners, the private equity firm that holds a majority stake in Spirit Airlines.
- Indigo Partners and Oaktree Capital Management, both major investors in aviation, were not expected to reduce their shareholdings in the IPO.
- LCC shares in Europe, particularly in the UK and Ireland, improved as concerns over the severity of the Grimsvotn volcanic eruption eased.
- Ryanair, an Irish LCC, sparked controversy by claiming that the volcanic cloud was a "non-existent and mythical invention."
- The UK Civil Aviation Authority quickly rejected Ryanair's claims.
Fund raised were to have be used to repay debt and pay Indigo Partners, the private equity firm which bought a majority stake in Spirit in 2006. Indigo Partners is heavily involved in LCC investment globally, with stakes in Wizz Air, Volaris, Tiger Airways and Avianova.
Neither Indigo Partners or Oaktree Capital Management, also a major investor in aviation businesses, were expected to reduce their shareholdings in the IPO.
In Europe, LCC shares improved, particularly in the UK and Ireland, as fears over the severity of the Grimsvotn volcanic eruption eased. The eruption has resulted in the cancellation of more than 500 flights and expected to affect flights in continental Europe through the remainder of the week, but a repeat of the week-long crisis in 2010, when 100,000 flights were cancelled, is not expected. UK and Irish carriers had been some of the first to suffer cancellations due to the risk of ash contamination.
Irish LCC Ryanair sparked controversy by claiming the cloud is "non-existent and mythical and misguided invention by the UK Met Office and the Civil Aviation Authority". The UK Civil Aviation Authority was quick to reject the carrier's claims.
Selected LCC share price movements (% change): 24-May-2011
