Malaysia's AirAsia is keeping tight-lipped about plans to list its affiliate AirAsia Indonesia.
AirAsia confirmed on 15 October that plans to buy a stake in Indonesian carrier Batavia Air had fallen through, following which the company's group chief executive Tony Fernandes said the focus will be on pushing through an initial public offering (IPO) for its affiliate.
AirAsia Indonesia chief executive Dharmadi says the carrier will accelerate its acquisition plans from 2013.
"We are looking to more than triple our fleet size in the next five years to accommodate an average annual passenger growth rate of 24% and 28% in international and domestic markets respectively," he says. "We will continue to strengthen our network by adding more hubs and developing our services to eastern Indonesia. In an effort to stay ahead of the curve, AirAsia Indonesia will also upgrade its sales and distribution system, provide differentiated services, while implementing dynamic pricing strategies."
AirAsia declined to provide further details about the potential IPO.
In December 2011, Indonesia AirAsia said it would postpone its IPO, which was originally scheduled for the fourth quarter of 2011, to 2012. At that time, it attributed the delay to economic uncertainty.
On 26 July, AirAsia and its partner Fersindo Nusaperkasa signed an agreement to buy Indonesia's Batavia Air. AirAsia holds 49% of AirAsia Indonesia, while Fersindo Nusaperkasa holds the remaining 51%. The deal was eventually abandoned because of its cost, even though AirAsia said on 15 October that its Indonesian unit would still work closely with Batavia Air on ground handling, distribution, inventory and training.
"We always knew it was not going to be an easy transaction," says Fernandes.
"It has been a very good experience and we come out of it feeling more confident of what we need to do to grow the market in Indonesia. Our aggressive focus in Indonesia remains and we will push our Indonesian IPO plans, while still maintaining close co-operation with Batavia Air.
"The company's decision was based on a thorough evaluation by many parties into Batavia Air. In our minds, the timing was perhaps not appropriate as it would have induced too many risks and would ultimately be earnings dilutive to our shareholders."
Indonesia's Jakarta Composite Index has enjoyed strong gains in 2012, rising by 15% for the year to date.