By Denise A. Valdez
PHILIPPINES AirAsia, Inc. said its planned initial public offering (IPO) may again be deferred to mid-2019, citing high fuel prices and the continued weakness of the peso against the US dollar.
“We’re still working on it, but I think it might get delayed. Probably next year. There are too many problems at the moment, especially the fuel prices, the foreign exchange rate, plus the Boracay closure,” Philippines AirAsia Chief Executive Officer (CEO) Dexter M. Comendador told reporters in Makati City on Friday.
The budget carrier was planning to raise up to $250 million in an IPO this year, with proceeds to be used for its expansion.
While the company performed “a lot better” in the first half of 2018 compared to the same period in 2017, Mr. Comendador said operations continue to be affected by the rising jet fuel prices and the peso’s weakness.
He said AirAsia also took a hit from the six-month closure of Boracay. The island, which is undergoing rehabilitation, is expected to reopen before the end of October.
Despite this, Mr. Comendador said Philippines AirAsia has not increased its fares.
“We’re trying to keep the fares down to keep the load factor. Otherwise, if we raise it, it will drop. So we held on the air fares. We’re so far doing okay on the load factor… It’s a tricky situation. If I add to my fares, my load might drop,” he added.
In May, AirAsia Group Chief Executive Officer (CEO) Anthony Francis “Tony” Fernandes expressed confidence the Philippine unit will be able to push through with its IPO.
“We’re doing very well in the Philippines right now… We had a baptism of fire when we came in here. We weren’t warmly welcomed by our competitors. They did everything to eradicate us. And now we’ve crossed over that. That made us tougher, smarter, and we’re now in a good position. Philippines is probably our best kept secret,” he said then.
Mr. Fernandes has said the Philippine unit will be the last to be listed on a stock exchange, after AirAsia units in Malaysia, Indonesia and Thailand. He is planning to consolidate all the units into one holding company someday, making AirAsia Group a single economic unit in the ASEAN region.
“Eventually, I hope we can swap those shares into one company. So let’s say the 60% owned by Filipinos would be able to go up to AirAsia Group. So they wouldn’t just have a share of Philippines, they would have a share of the whole airline,” Mr. Fernandes said.