Tony Fernandes looks to list AirAsia India, make it profitable
10 January 2018
AirAsia India, the local arm of Malaysian Airline group AirAsia, is looking for a public listing and will seek shareholders' approval for appointing bankers for the process, group chairman Tony Fernandes said on Tuesday, but he said AirAsia needs to be profitable before going for an IPO.
AirAsia in the process of appointing a banker to find a partner for our profitable and successful shared services centre, he said
''AirAsia in the process of appointing a banker to find a partner for our profitable and successful shared services centre... AirAsia will be seeking approval at the next AirAsia India board to pick a banker to start prelim process. Very valuable asset with huge growth potential. Analysts giving zero value to AirAsia India. Not far from 20 planes and a potential IPO,'' Fernandes said in a series of tweets.
Market regulator Securities and Exchange Board of India (Sebi), however, mandates that to become eligible for an initial public offer (IPO), a company should show average pre-tax profit of Rs15 crore for at least three financial years.
AirAsia India is still in red. The company registered a net loss of Rs140 crore for the 2016-17 fiscal, which was 23 per cent less than almost Rs182 crore loss reported in fiscal 20115-16. Revenue rose nearly 45 per cent to Rs952 crore.
The joint venture of Malaysia's AirAsia Berhad and India's Tata Sons, which started operations in June 2014, has accumulated losses of Rs485 crore and continues to make losses in a market that is the fastest growing in the world.
To go for a public issue the airline needs to show profit and industry sources expect the airline to consolidate operations and post profit before going public. ''IPO is immediately not on mind. What does a market look when it invests in a company? It looks at the past which was not very smooth. It looks at future which we don't know. Presently, the company is trying to steady the ship and consolidate operations,'' reports quoted a source close to the development as saying.
AirAsia India CEO Amar Abrol had also said the airline was looking to be profitable by FY 19. ''We have an eye on profitability and be there sooner than later, perhaps by 2019,'' he said. He expects the airline to get into the black in three steps – first clock a positive gross profit margin, then become cash flow positive and finally become profitable at EBIT level.
Gross profit margin of the company is expected to be positive beginning December 2017 and continue to remain so in January as also in February, he said.
The airline expects to induct 7 A320 planes this year, which would take its total fleet to more than 20 and make it eligible for international operations.