SINGAPORE/HONG KONG: Indonesia’s Lion Air is launching a pre-marketing drive next week for a potential public float, three sources familiar with its plans said, as the airline seeks to win over investors more than a year after the fatal crash of one of its Boeing 737 MAX jets.
The carrier, one of Asia’s largest budget carriers with 112 planes, will begin investor presentations next week in Jakarta, followed by Singapore, Hong Kong and cities in Europe and the US, said the sources who declined to be identified as they were not authorised to speak to the media.
A spokesman for Lion Air declined to comment.
Two of the sources said there was no target for the capital raising but the airline is expected to raise just over US$500 mil (RM2.031 bil). One of the sources said the IPO could be launched in the first quarter.
Last November, sources had suggested a range of between US$750 mil and US$1 bil for the fundraising.
Roadshows are a means for a company’s bankers to gauge investor appetite and detect any potentially thorny issues before the company commits to launching a deal.
BNP Paribas and Morgan Stanley are the international banks leading the deal. Both declined to comment.
Lion Air has toyed with an IPO for more than five years.
A termsheet reviewed by Reuters said the proceeds of any deal would go towards longer-term leases more akin to owning planes, as well as towards its general operations.
Lion Air has one of the industry’s biggest outstanding orders with both Boeing and Airbus.
The float plans come as the Indonesian market is stabilising after years of overcapacity.
“There has been a dramatic change in the Indonesian market as all airlines reduced capacity and that resulted in significant increases in yields and therefore the market became profitable,” said Brendan Sobie, an independent aviation analyst based in Singapore.
The IPO also comes more than a year after the October 2018 fatal crash of a Lion Air Boeing jet that killed all 189 people on board.
The accident, followed within five months by another at Ethiopian Airlines, led to the global grounding of all Boeing 737 Max planes and triggered a crisis for the US planemaker.
Last October an Indonesian accident report into the disaster focused on flaws in Boeing cockpit software, while also recommending better training at Lion Air and improved US and local regulation. – Jan 245, 2020, Reuters
