Indonesia’s Lion Air IPO In The Works Months After Boeing 737 MAX Crash

Indonesia’s Lion Air, recovering from the Boeing 737 Max 8 jet crash, six months ago and killed 189 people, is readying for a domestic IPO launch, reports Bloomberg.

Lion Air hogged news headlines soon after the March 10 crash of Ethiopian Airlines in Nairobi that also had the same Boeing aircraft.

Lion Air IPO may raise $ 1 billion

According to informed sources, Lion Air is targeting $1 billion for fundraising, though no precise terms for the deal are available.

The report said Lion Air has started working with advisers on the share sale and the IPO may come up this year itself.

The airline’s preliminary meetings with investors will start soon. However, the listing’s timing will depend on the feedback from investors.

The listing can also be postponed until the presidential election in April gets over, according to knowledgeable people.

The $1 billion public offer could be Indonesia’s third-largest IPO so far, according to Bloomberg data.

Lion Air has been mulling public issue since 2005. But plans got delayed for many reasons including a flagging Indonesian economy. Lion Air had talked about IPO plans in 2014 and 2016 as well.

Indonesia Stock Exchange (IDX) director, I Gede Nyoman Yetna told Reuters that the Lion Air management team had joined an IPO class in anticipation of listing. But they have not submitted any official documents so far.

“The class was designed for prospective issuers, especially those with plans to go public in the immediate future,” Yetna said.

However, Lion Air did not comment.

The Asia Pacific ripe for aviation IPOs

Meanwhile, investor appetite for IPOs in the aviation industry varies from region to region, according to an expert.

Gediminas Ziemelis, aviation industry executive and Board Chairman of Avia Solutions Group said overall a positive outlook prevails in the aviation industry since 2016.

This brightened outlook followed low aviation fuel prices that improved airlines’ balance sheets, increased cash flows in the market and future of the industry.

This means airline IPOs can expect a better response. But market conditions vary in different regions.

The airline industry in Europe is in a consolidation process, he noted. In Europe, Wizzair IPO was a notable one.

However, the Asia-Pacific region is different from Europe. Here the growing middle class and the rising number of air passengers are boosting the industry’s growth.

The capital markets in the Asia-Pacific market are also developing well including those receptive to the aviation sector. No negative changes to that trend are expected soon, Ziemelis added.