AirAsia plans share sale of Indonesia subsidiary early next year

SINGAPORE (Bloomberg) - AirAsia Bhd., Asia's second-largest budget carrier by market value, plans an initial public offering of its Indonesia business early next year as travel demand surges.

The airline will assign bankers for the IPO soon and will make an announcement on the offering in the next couple of months, Tony Fernandes, the group's chief executive officer, said in a Bloomberg Television interview with Rishaad Salamat. A share sale for AirAsia's Philippine business will follow, he said.

The plans come after a plane operated by AirAsia's Indonesian affiliate crashed in December en route to Singapore from Surabaya, killing all 162 people on board. The airline hopes to take advantage of rapid growth in Asia-Pacific, where the number of passengers is projected to grow by nearly 5 per cent a year for the next two decades, according to the International Air Transport Association.

"There's tremendous new tourism opportunities, and secondary cities in Indonesia are booming," Fernandes said in the interview from Jakarta. "We are very bullish about developing new international links out of the secondary and third-tier cities in this wide country."

Fernandes said "no progress" had been made on restarting service between Singapore and Surabaya after the December crash.

AirAsia, which is listed in Kuala Lumpur, expects to start a Japan venture early next year and is currently in the final stages of the application process, Fernandes said. The carrier teamed up with Rakuten Inc. in July for a second attempt in Japan, after ending a joint venture with ANA Holdings Inc. in 2013.

Fernandes also said AirAsia will be profitable this year, regardless of oil prices.