AirAsia X gears up for IPO as stand-alone airline
AirAsia Group announced (08-Jun-2010) it is embarking on a corporate and organisational restructuring to provide investors with a clearer and more focused business model. The airline is moving away from consolidating all businesses into a single investment entity towards having separate public-listed entities that give investors clear choices to invest, based on geographic and business model foci. Investors may choose to invest in the countries where AirAsia is based – including Malaysia, Thailand and Indonesia – and in the short-haul or long-haul business model.
- IPO: Under the plans, AirAsia X is eyeing a public listing in the 2H2011, subject to market conditions, as it is now reaching sufficient scale economies to stand on its own instead of relying on services provided by AirAsia. It is completing a MYR100 million (USD30.1 million) rights issue exercise to achieve financial independence and fund its continued growth. AirAsia X is growing its fleet by 37.5% to 11 aircraft and expanding its route network in Asia, including India, Korea and Japan, by year-end and a second European destination, either in France or Germany, next year (Associated Press, 08-Jun-2010). It also plans to take delivery of 27 new A330 and A350 aircraft over the next 10 years and expects to double its revenue this year from the USD216 million it reported last year.
- Restructure: Organisationally, AirAsia X will take over employment of its own widebody pilots, cabin crew and ground staff as well as its commercial and marketing team. This will enable AirAsia X to aggressively pursue its own commercial strategy and better develop capabilities in long-haul services. The new model will allow both AirAsia Berhad and AirAsia X to pursue a clearer and more focused business strategy, attract relevant investor profiles and still achieve the competitive advantage of having common-branded short-haul and long-haul networks strategically feeding each other. AirAsia will benefit from accessing growth markets in North Asia, Australia, India and Europe that will be fed from AirAsia X’s trunk routes. On the other hand, AirAsia X will be able to attract guests in these markets with AirAsia’s network of destinations across Southeast Asia. AirAsia X will continue to use the AirAsia brand and airasia.com website as part of its 30-year brand licence agreement with AirAsia Berhad. [more - IPO] [more - AirAsia X independence details]
AirAsia: “After more than two years of operation, we have begun to notice some dilution of the AirAsia business model and recognise the need for AirAsia and AirAsia X to remain focus on their respective markets. Nevertheless, we are extremely pleased with how quickly AirAsia X has grown in the two and a half years since its birth. It is a fantastic product and service and we see this reorganisation as symbolic of it coming into its own as it flies into its next growth phase. This arrangement gives AirAsia X financial independence and the latitude to develop its own marketing strategy. While it continues to capitalise the strength of the AirAsia brand, website and culture this separation gives more focus and discipline to AirAsia X’s model ... There are lots of upside in Asia-Pacific travel, especially in China and India. We think the timing is right [for a listing]. We expect the markets to recover in 2011,” Tony Fernandes, CEO. Source: AirAsia/Associated Press, 08-Jun-2010.