AirAsia X IPO to sell 33.3% of shares

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Petaling Jaya (The Star/ANN) - AirAsia X Bhd, the medium haul budget carrier of AirAsia Bhd, is offering for sale 790.12million shares or 33.3% of the company in an initial public offering (IPO) that will utilise proceeds to reduce bank borrowings and for capital expenditure.

The IPO will comprise 592.59 million new shares and 197.53mil existing shares, with the new shares representing 75% of the IPO proceeds while the remainder of the proceeds will go to its promoters.

Reuters reported that the IPO, expected to debut by January, was expected to raise about US$250 million for AirAsia X.

Based on Reuters' own calculation, the total IPO of 790.12 million shares could be worth 97 sen per share.

However, AirAsia X has given no information on pricing, size of the listing or a timeframe for the IPO. The par value of the shares is at 15 sen a piece, and the price of the IPO will only be fixed after a book building exercise, for which the dates were not disclosed in the document.

Meanwhile, Bernama quoted chief executive officer Azran Osman-Rani as saying that the company submitted the proposal to the Securities Commission few days ago and expected to receive the nod by middle of next month.

"We are expecting to get the approvals by mid-December and if everything goes well, we hope to be listed by early next year," he told reporters at AirAsia X's fifth anniversary celebrations here yesterday.

In its draft prospectus released yesterday, AirAsia X said it would use more than half or 55.1% of the proceeds to repay bank borrowings, while 21.5% for capital expenditure which includes the acquisition of engineering and aircraft, as well as for expansion of new hubs in the future.

It said the balance 20.2% would be used for working capital and the rest for listing expenses.

AirAsia X currently serves 12 destinations across Asia, and Australia, and conducts chartered flights to the Middle East. Operating a fleet of nine A330-300s and two A340-300s, it represents the largest low cost carrier wide-body aircraft seat capacity in the Asia Pacific region.

For the six months ended June 30, 2012, the company recorded a net loss of 29.1 million ringgit on a revenue of 941.9 million ringgit.

On its operations, it said for the six month ended June 30, 2012, revenue from passenger seat sales on scheduled flights decreased by 30.3 million ringgit, or about 4.5%, to 640.4 million ringgit for the six months ended June 30, 2012 versus 670.70 million ringgit in the previous corresponding period.

"This decrease was due primarily to a 4.7% drop in seat capacity in the six months ended June 30, 2012 (H1, 2012) as compared to the six months ended June 30, 2011as a result of a reduction in the average number of aircraft during the period from 11 to 9 caused by the wet lease of our two A300-340s to third parties during H1, 2012," it said.

Ancillary revenue including AirAsia Insure increased to 167.2 million ringgit, or about 20.5%, for H1, 2012 from 138.7 million ringgit a year ago.

"This increase was due primarily to the overall increase in number of passengers carried in H1, 2012, revisions to our rates relating to certain of our ancillary products and the introduction of Optiontown as a new ancillary product," it said.

AirAsia X said fuel costs decreased 3.5% to 483.1 million ringgit in H1, 2012 from 500.7 million ringgit a year ago, mainly due to a 6.7% decrease in fuel consumed in H1, 2012 from a year ago.

For the year ended December 31, 2011, AirAsia X made a net loss of 96.7 million ringgit on the back of 1.86 billion ringgit in revenue.

According to its draft prospectus, its revenue grew from 230.7 million ringgit in 2008 to 1.9 billion ringgit in 2011, representing a compounded annual growth rate of 100.6%.

As at June 30, 2012, it had 1.369 billion ringgit of property, plant and equipment, including 51.9 million ringgit of aircraft engines and 1.246 billion ringgit of aircraft frames and service potential. Post IPO, its promoter and substantial shareholder, Aero Ventures Sdn Bhd will hold about 34.4% of the company, while second largest shareholder AirAsia Bhd will hold 12.1%, following with Orix Airline Holdings Limited with a 7.2% stake.

Besides Tan Sri Tony Fernandes and his partner Datuk Kamarudin Meranun, the other board members include former International Trade and Industry Minister Tan Sri Rafidah Aziz and former Bursa Malaysia Bhd CEO Datuk Yusli Mohamed Yusof,

It has also appointed ECM Libra Group managing director Lim Kian Onn and ECM Libra chairman Datuk Seri Kalimullah Masheerul Hassan.

AirAsia X also said it did not have any formal dividend policy, but the board intends to adopt a progressive dividend policy, subject to factors including but not limited to its financial performance, cash flow requirements, availability of distributable reserves and capital expenditure plans.

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