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Tigerair Taiwan IPO targeted at expansion, securing financing

China Airlines believes that a listing for Tigerair Taiwan will pave the road for the low-cost carrier’s expansion, as well as ease the securing of financing.

The Taiwanese flag carrier tells FlightGlobal that plans for Tigerair Taiwan's listing is in its “early stages”, and that the amount to be raised is still being evaluated, with discussions ongoing with its sponsoring broker.

It will however lower its stake in Tigerair Taiwan to less than 70%, in-line with regulations on the Taiwan Stock Exchange. It will hence look to reduce its 100% holding through share release and cash capital increase.

“The decision to apply to list Tigerair Taiwan was based on considerations such as greater ease of fund-raising in the future, financial autonomy, and increasing equity value,” says China Airlines.

It adds that the listing will lead to better disclosure and transparency, more investor familiarity, as well as a boost to its corporate image and brand recognition.

“All of these will be conducive to future business expansion and financing.”

China Airlines also disclosed that Tigerair Taiwan achieved breakeven in 2018. Revenue for the unit exceeded NT$6.8 billion ($220 million) in 2017, and it surpassed the figure by September 2018.

Last year, the carrier launched six new routes: from Taipei to the Japanese cities of Komatsu, Ibaraki, Asahikawa, Hanamaki and Saga, as well as from Kaohsiung to Nagoya.

China Airlines adds that Tigerair Taiwan also plans to establish more codeshare and joint sales partnerships with various airlines to build its network going forward. It started codesharing with South Korean LCC T’way Air last year.

In a stock exchange statement last week, China Airlines disclosed that its board has given its approval to prepare for the listing of Tigerair Taiwan.

China Airlines took full control of Tigerair Taiwan in December 2016. In 2017, China Airlines chairman Ho Nuan-Hsuan told FlightGlobal that Tigerair Taiwan had taken over the charter business of China Airlines, diverging from its pure low-cost model.

The LCC used to be a 90:10 joint venture between China Airlines and Tigerair, a former Singapore Airlines unit that was merged with Scoot. The Taiwanese carrier purchased the remaining 10% stake following disagreements on how the carrier should be run, and unhappiness that Singapore-based Tigerair needed to approve all major business decisions despite its small stake.

FlightGlobal schedules data shows that Tigerair Taiwan’s network focuses on services to Japan, and to destinations in South Korea, China, the Philippines and Thailand. It operates a fleet of 11 Airbus A320s.

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