Indonesia’s Lion Air readies for mega-IPO

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Indonesia's Lion Air Readies For Mega-IPO

Lion Air, Indonesia’s largest airline by market size and destinations and the second largest low-cost airline in Southeast Asia after AirAsia, is set to announce the conditions for its planned IPO at the Jakarta stock exchange as early as next week. The airline is targeting $1 billion in proceeds from the share sale, which would make it Indonesia’s third-largest IPO on record.

The possibility of listing has been mooted by the carrier as far back as 2005, though the plans have been delayed multiple times due to a lackluster Indonesian economy and other issues. A decision on the IPO could also only be made after Indonesian investigators released the final report on the crash of Lion Air’s Boeing 737 MAX jet last October that killed 189 people on board.

The bulk of the demand for shares will have to come from investors outside Indonesia, analysts noted, since Lion Air is among other 30 large domestic companies lining up for a public offering in the near future.

Jakarta-headquartered Lion Air operates domestic and international routes, which connects different destinations of Indonesia to Singapore, the Philippines, Malaysia, Thailand, Australia, India, Japan and Saudi Arabia. Including charter routes to China, Hong Kong, South Korea and Macau, the carrier makes more than 630 flights per day.

Lion Air has three domestic subsidiaries, namely Batik Air, Wings Air and Lion Bizjet, and has operations in Malaysia (Malindo Air) and Thailand (Thai Lion Air). Overall, the airline flies to 126 destinations, more than Indonesia’s state carrier Garuda Indonesia with 96 destinations. Lion Air’s market share in Indonesia is currently 41.6 per cent, as compared to Garuda with 23.5 per cent.

Furthermore, Lion Air is the second-largest Boeing customer as per orders behind US-based Southwest Airlines and ahead of Ireland’s Ryanair. Lion Air also clocks the third biggest order for the Boeing 737 MAX behind Southwest and flydubai with 201 of this aircraft bound for delivery. However, the crash of flight 610 with a 737 MAX jet in October 2018 prompted Lion Air to announce that all Boeing orders would likely be cancelled. The 14 jets of the type that have already been delivered are currently grounded.

After being criticised for poor operational management in areas such as scheduling and safety in the past, Lion Air undertook various steps to improve its safety with the result that in June 2016, the European Union lifted the ban it had placed on Lion Air from flying into European airspace. In June 2018, Lion Air attained a positive safety rating following an audit by the International Civil Aviation Organisation.

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Lion Air, Indonesia’s largest airline by market size and destinations and the second largest low-cost airline in Southeast Asia after AirAsia, is set to announce the conditions for its planned IPO at the Jakarta stock exchange as early as next week. The airline is targeting $1 billion in proceeds from the share sale, which would make it Indonesia’s third-largest IPO on record. The possibility of listing has been mooted by the carrier as far back as 2005, though the plans have been delayed multiple times due to a lackluster Indonesian economy and other issues. A decision on the IPO could...

Reading Time: 2 minutes

Indonesia's Lion Air Readies For Mega-IPO

Lion Air, Indonesia’s largest airline by market size and destinations and the second largest low-cost airline in Southeast Asia after AirAsia, is set to announce the conditions for its planned IPO at the Jakarta stock exchange as early as next week. The airline is targeting $1 billion in proceeds from the share sale, which would make it Indonesia’s third-largest IPO on record.

The possibility of listing has been mooted by the carrier as far back as 2005, though the plans have been delayed multiple times due to a lackluster Indonesian economy and other issues. A decision on the IPO could also only be made after Indonesian investigators released the final report on the crash of Lion Air’s Boeing 737 MAX jet last October that killed 189 people on board.

The bulk of the demand for shares will have to come from investors outside Indonesia, analysts noted, since Lion Air is among other 30 large domestic companies lining up for a public offering in the near future.

Jakarta-headquartered Lion Air operates domestic and international routes, which connects different destinations of Indonesia to Singapore, the Philippines, Malaysia, Thailand, Australia, India, Japan and Saudi Arabia. Including charter routes to China, Hong Kong, South Korea and Macau, the carrier makes more than 630 flights per day.

Lion Air has three domestic subsidiaries, namely Batik Air, Wings Air and Lion Bizjet, and has operations in Malaysia (Malindo Air) and Thailand (Thai Lion Air). Overall, the airline flies to 126 destinations, more than Indonesia’s state carrier Garuda Indonesia with 96 destinations. Lion Air’s market share in Indonesia is currently 41.6 per cent, as compared to Garuda with 23.5 per cent.

Furthermore, Lion Air is the second-largest Boeing customer as per orders behind US-based Southwest Airlines and ahead of Ireland’s Ryanair. Lion Air also clocks the third biggest order for the Boeing 737 MAX behind Southwest and flydubai with 201 of this aircraft bound for delivery. However, the crash of flight 610 with a 737 MAX jet in October 2018 prompted Lion Air to announce that all Boeing orders would likely be cancelled. The 14 jets of the type that have already been delivered are currently grounded.

After being criticised for poor operational management in areas such as scheduling and safety in the past, Lion Air undertook various steps to improve its safety with the result that in June 2016, the European Union lifted the ban it had placed on Lion Air from flying into European airspace. In June 2018, Lion Air attained a positive safety rating following an audit by the International Civil Aviation Organisation.

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