AirAsia India IPO Coming Soon: Positive Signal for Airline Industry?

While a lot of news is floating in the aviation market, including the disinvestment decision of Air India, strengthening of airlines security, airlines expanding their business, FDI in this sector, airlines raising their IPOs .  There is breaking news that is grappling the attention of the media and people alike. Yes! Here we are talking about AirAsia Airlines. The airline is definitely sending a positive signal to the market by initiating its IPO for Indian unit.  

AirAsia’s financial profile

AirAsia India commenced its business operations way back in June 2014 and has witnessed a rise of 4 % in its domestic share and has a fleet of 14 airbus A320 aircraft and its competitors are Indigo and Spice Jet.

 In the earlier year, the Indian venture reported a net loss of 16.4 crore in the quarter ended September, while its rivals including Spice Jet reported a rise of 79% increase in net profit and Indigo Aviation profit quadrupled to Rs 551.55 crore in the month of September. However, the CEO of transport research firm confirmed that if the airlines expand its business to the fleet of 20 planes, the loss making unit can turned profitable. It could earn revenue worth $200 billion based on the listed Indian airline rivals. The company strategy involves selling more stakes in non-flying business to fund special dividends.

The Air Asia Chief Executive Tony Fernandes tweeted:

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.

— Tony Fernandes (@tonyfernandes) January 10, 2018

What the analysts have to say about AirAsia IPO?

While the financial analysts are giving zero value to Air Asia India, but Tony considers it to be a “very valuable asset with a huge growth potential”, he confirmed in a series of tweets.

AirAsia rivals

Spice Jet and Indigo are the listed rivals of Air Asia and have a fleet of 58 and 150 planes with a market cap of Rs 8,000 crore and Rs 47,000 crore, respectively.

How it will affect the aviation sector?

Aviation revolution is in the air, confirms the Spice Jet chairman Ajay Singh. Though the infrastructure remains the biggest obstacle but the airlines are trying their best to add new routes, improve profitability and government’s initiative UDAN scheme is further fueling the growth.  The year 2018 will definitely bring positivity in the aviation sector and the launch of this IPO is definitely a positive move towards it.

AirAsia IPO will be worth investing?

According to the Indian regulations, the airlines can raise an IPO provided it has at least a fleet of 20 aircrafts to flying on the international destination. Air Asia India, has a joint venture with Tata Sons and has only 14 planes. However, in this year it will expand its operations to 20 planes. But will this IPO tender a good support or not that time will tell.