Saturday, February 13, 2010

Thai AirAsia to raise funds from expansion

05 February 2010

Thai AirAsia, the country's largest low-cost airline, is mulling fund-mobilisation options to finance its massive business expansion.

"Listing shares in the Thai stock market is one of our choices," CEO Tassapon Bijleveld said yesterday.

Another option is issuing new shares and selling them to investors.

"We're planning to expand our aviation business. So far, we don't know how large an investment budget we need, but we have to study many ways of mobilising funds to prepare ourselves. To list in the Stock Exchange of Thailand is one of the solutions. Our parent company - AirAsia [of Malaysia] - will have a dual listing in the SET [and Kuala Lumpur], but it's not necessary for us to follow them [into the SET]," he said.

Tassapon did provide details of Thai AirAsia's planned business expansion.

Thai AirAsia - the country's most robust low-cost carrier - is continuing expansion of its routes to cover more major Asian destinations. The airline plans to expand its service to four Indian cities: Mumbai, New Delhi, Kolkata and Hyderabad.

Tassapon said the company targeted a net profit of Bt1 billion this year, against about Bt400 million last year, based on the assumption of jet fuel costing an average of US$80 (Bt2,650) per barrel.

The predicted jump in net profit is possible because of a new fleet of Airbus A320s, which will increase overall seating capacity by 25 per cent, while jet-fuel consumption will decrease by 2 per cent from the current Boeing 737 fleet.


Meanwhile, the new Airbus A320s can transport more cargo, which will also mean extra revenue, he added.

The airline's revenue target for the year is Bt12 billion, up from about Bt8 billion in 2009. Its market share for the domestic market is expected to rise to 50 per cent from 40 per cent last year.

Tassapon said eight Airbus A320s would enter the fleet this year, starting in April. Six of the aircraft will replace the carrier's six Boeing 737s. Thai AirAsia will have a fleet of 20 aircraft - all of them A320s - by the end of the year, against 18 last year.

It plans to utilise the new aircraft on the routes to India and to increase frequency on popular routes such as Phuket-Hong Kong and Phuket-Udon Thani. The first Indian route - Bangkok-Mumbai - is expected to commence operations in April.

The company expects 120,000 Indians to travel to Thailand on Thai AirAsia this year.

Tassapon predicts an average load factor of 85 per cent this year, rising from 78 per cent in 2009. The airline expects to carry 5.8 million passengers, up from about 5.2 million last year.

Thai AirAsia, which yesterday celebrated its sixth anniversary, plans to strengthen its aviation hub at Phuket International Airport by seeking new routes and increasing the frequency of profit-making routes.


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