By Arjay L. Balinbin
ANGELES CITY, PAMPANGA — Philippines AirAsia, Inc. said floating its shares in the Philippine Stock Exchange is still on the table.
“Right now, frankly speaking, the initial public offering (IPO) is still in the planning [stage]. But the more important pressing matter now is to recover immediately from the [impact of the coronavirus outbreak]; so that at the end of the day, when we do the IPO, our bottom lines are mostly very good,” Philippines AirAsia Chief Executive Officer (CEO) Ricardo P. Isla told reporters on Friday on the sidelines of the AirAsia 2nd Business Assembly held in Angeles City, Pampanga.
Philippines AirAsia Chairman Joseph Omar A. Castillo said in October last year that the budget carrier was looking to launch its IPO by the third quarter of 2020 to the first quarter of 2021.
He said the company was still “undergoing a restructuring” in preparation for the IPO.
Philippines AirAsia has postponed its planned public offering several times due to market volatility.
Mr. Isla said the novel coronavirus outbreak, which has forced the Philippine government to impose a travel ban on China, Hong Kong, Macau and parts of South Korea, could dent “25% to 30%” of the budget carrier’s business in the Philippines.
He likewise noted that Philippines AirAsia’s net income in 2019 grew “almost like P1.5 billion.”
“We were good last year. We still have to be a lot better this year,” Mr. Isla added.
To recall, the budget carrier swung to a net operating loss of P2.11 billion in 2018 from a profit of P710 million in 2017 as it was hit by the rise in the price of jet fuel and the weakening of the Philippine peso against the US dollar.
In terms of market dominance, AirAsia Group Berhad said in a statement last Friday that its Philippine unit grew the most by 4 percentage points (ppts) to 23% in the fourth quarter of 2019. The increase was driven by a strong 21% growth in passengers carried, according to Acting CEO and President (Airlines) of AirAsia Group Berhad Bo Lingam.
“AirAsia Philippines posted robust growth in 4Q 2019 ASK (available seat kilometers), up 25% year-on-year, while carrying 21% more passengers through its network. Effective cost control resulted in 36% improvement in CASK (cost per available seat kilometer) and ultimately 214% improvement in bottomline profit,” he added.
Mr. Isla said Philippines AirAsia has a “big” revenue target for 2020. But the board of directors will have to revisit the figure as it was set prior to the coronavirus outbreak.
“That was set actually in the fourth quarter of last year. We have to revisit it. We have to review it. We have to be practical also,” he explained.
He also said that April might be “an improvement month” for the airline industry in the Philippines.
The budget carrier, which is set to launch two new domestic routes before the end of the year, will be focusing on improving its domestic services this year, Mr. Isla said.
The company announced recently its new flights to Zamboanga, General Santos City, and Dumaguete City via Clark International Airport in Pampanga.
Philippines AirAsia will also be adding flights to at least three of its existing international destinations such as Ho Chi Minh, Vietnam; Bangkok, Thailand; and Osaka, Japan.
As for the impact of the coronavirus outbreak on the budget carrier’s financial performance in the first two months of 2020, Mr. Isla said: “We cannot disclose at this point our losses but [they’re] quite big, frankly speaking.”
“But we were prepared. We think we strengthened our position. Even last year, we saw a lot of potential in domestic tourism, and that’s a big source of our growth for this year,” he added.