JAKARTA (TheInsiderStories) – Sriwijaya Air, the third-largest airline in Indonesia, has decided to postpone its initial public offering (IPO) on the Indonesia Stock Exchange, moving to 2018 from an initial target set by the company for 2017.
Chandra Lie, President Director of Sriwijaya Air, has admitted the airline needs more time to prepare the IPO properly. Lie added that they may also revise the number of shares to be offered to the public. Earlier, Sriwijaya Air planned to offer 25 per cent of its outstanding total.
The airline, founded by the Lie family, Johannes Bundjamin and Andy Halim, have been planning an IPO since the company posted a net profit for the last three consecutive years. The airline expects to become more transparent through the IPO, and looks to obtain fresh funds to finance the purchase of 15 new narrow body (B737-800NG) and 2 new wide body (B777-300ER) aircraft, while at the same time increasing its number of routes.
Lie told TheInsiderStories that the company is still optimistic about the future of the airline business in this country, as the government has set an ambitious target to lure 20 million foreign tourists by 2019, a move which certainly benefits the airline industry.
Q: What is your outlook for business after postponing the IPO plan?
A: We currently observe several carriers that are experiencing hard times with their financial situation. That indicates to us that this is not the best time to launch a corporate action, such as selling shares on the capital market. We thus decided to postpone the IPO to 2018.
Q: Indonesia’s tourism sector has grown rapidly. What’s your strategic plan for 2018?
A: We will attract more tourists from China. Currently, we have one direct flight from China to Bali. There are an estimated 42 million Chinese tourists traveling the world; this represents a great opportunity for us in the airline business. The Chinese market looks ‘pretty sexy’. Chinese tourists are also known to be big spenders. We will support the government in its effort to achieve its 20 million foreign tourist arrivals in 2018.
Q: How many passengers are targeted for next year?
A: Sriwijaya Air is targeting 1.2 million passengers next year, from a projected 1 million passengers this year.
Q: Is there any plan to add more aircraft?
A: Certainly, we prepare at least 10 new airplanes every year; this means we will be recruiting at least 40 new pilots next year. We now have a fleet of 60 aircraft, and this will rise to 70 next year.
Q: Where will you find funding after postponing the IPO?
A: We mostly secure the funds from our internal cash flow and loans from financial institutions.
Q: Is there any plan to issue bonds next year?
A: No, we don’t have any such plans.
Q: The government will increase flight frequency to Silangit International Airport in North Sumatra, to boost the tourism sector in the region; Sriwijaya already has one scheduled flight out of there. How do you see the potential of North Sumatra tourism?
A: The inauguration of Sriwijaya flights out of Silangit Airport is part of our support for the government program to achieve success for 10 national priority tourism destinations, in line with the government’s target of bringing in 20 million tourists by 2019. We are also grateful to the Ministry of Tourism which has facilitated and fully supported us in developing an aviation network, especially for potential tourism destinations.
Q: Is there any plan to open new route next year?
A: We will add more routes to China.
Written by Elisa Valenta, email: email@example.com