AirAsia Indonesia looks at fourth-quarter IPO

AirAsia, Southeast Asia’s biggest budget carrier, will soon appoint bankers to manage its Indonesian unit’s initial public offering as it tries to secure funds for expansion.

The Jakarta IPO is expected to take place in the fourth quarter, chief executive officer Tony Fernandes said on Monday. The amount to be raised by the unit, which has 20 planes, is still being decided, he said.

AirAsia also intends to hold an IPO for its Thai unit to help fund growth plans, including a possible order for 175 of Airbus SAS’s revamped A320s.

Business is “excellent,” Fernandes said. The airline, based in Sepang, Malaysia, is “very happy with results.” Fourth-quarter earnings are due to be reported on Thursday.

AirAsia Indonesia plans to raise funds so it can buy its own planes, which will help pare the parent company’s debt-to-equity ratios, Fernandes said. The Indonesian arm may surpass the Malaysian operations, which are more than three times as big, in the “not-too-distant future,” he said in November.

AirAsia closed unchanged at 2.76 ringgit in Kuala Lumpur trading on Monday. The stock has risen 9.1 percent this year.

The company may post a profit of 224.4 million ringgit ($74 million) in the quarter ended in December, according to the average of four analyst estimates compiled by Bloomberg. It posted a net income of 76.7 million ringgit a year earlier.

Garuda Indonesia, the nation’s biggest carrier, Singapore-based Tiger Airways Holdings and Philippines-based Cebu Air have also held IPOs since the beginning of 2010 as rising stock markets and growing travel lure investors.

Budi Ruseno, an analyst from Bhakti Capital, said the Indonesian stock market should be in good shape by the fourth quarter and AirAsia’s good reputation will help the IPO.