At long last AirAsia X Bhd will finally be listed in Bursa Kuala Lumpur very soon. On 10-6-2013 AirAsia X Bhd has made an official announcement of its Initial Public Offering (IPO) of up to 790,123,500 ordinary shares of RM0.15 in the main Board of Bursa Kuala Lumpur (BSKL). The retail price of the IPO is RM1.45, which is almost 10 times above its par value. Based on its retail price it would appear that AirAsia X Bhd is a rock solid company with big “dreams” otherwise its IPO price would not have been fixed at RM1.45!
AirAsia X Bhd was meant to be listed in November 2012 but it didn’t take off. May be it was due to “bad weather” then. At that material time, MITI also made available Bumiputera Special Share/Saham Khas Bumiputera for Bumiputera. But on this ocassion there is nothing pbublished in the MITI website as yet but AirAsia Bhd has allotted 260,740,700 shares to Bumiputera institutional and selected investors approved by MITI.
AirAsia X Bhd is hoping to raise RM1.15 billion through this IPO price of RM1.45 per share.
The principal adviser is none other than CIMB Investment Bank Bhd. Joint Managing Underwriters and Joint Underwriters are CIMB Investment Bank Bhd and Maybank Investment Bhd. The above were information available in the public domain.
Lets start with the background of AirAsia X Sdn Bhd. It was incorporated under the name of Fly Asian Express Sdn Bhd (popularly known as FAX) on 19-05-2006. Within a few months of its incorporation, FAX was granted the Air Operation Certificate (AOC).
Soon after incorporation FAX lobbied very hard to take over the Rural Air Service (RAS) in Sabah and Sarawak. Of course, in 2006 the administration of Tun Abdullah took away the RAS from MAS and handed over to FAX with an immediate payment of RM249.9 million as subsidise. Please read in HERE
When MAS was operating the RAS it only received RM120 million subsidies, which was half of what FAX received from the Government, with little complaints.
After less than a year, there were too many complaints of poor service from the Sabah and Sarawak State Governments and the people, FAX had to give up RAS to MAS. But FAX did not refund the subsidise on a pro-rata basis. Not a bad deal after all.
The poor RAS provided by FAX was due to lack of engineering expertise, aviation experience and supervision by our Department of Civil Aviation (DCA). It was later discovered that out of the 14 aircraft used for RAS by FAX were grounded at the material time and one of which was cannabalised for spare parts. When MAS took over the RAS from FAX, MAS had to pay RM35 million to refurbish all the aircraft operated by FAX in order to make them airworthy again. Please read in HERE.
In July 2007 FAX gave up RAS. On 21-9-2007, it changed its name to AirAsia X Sdn Bhd. Despite the poor RAS records, which has been shown to be unfit to operate an airline, DCA allowed it operate long haul flight when it could not even sustain a domestic operation with Fokker aircraft . Thereafter, came the AirAsia X Sdn Bhd, sounded like a new airline altogether. Please read in HERE, HERE, HERE & HERE.
AirAsia X thrived on publicity stance and many announcements were made by Tan Sri Tony Ferndandez about its expansion plans. A good example was the launching of AirAsia Japan on 21-7-2011 where All Nippon Airline (ANA) owned 67% and AirAsia 33%). AirAsia made news on its expansion. Please read in HERE.
But the ANA and AirAsia partnership was short lived. The AirAsia Japan only has a few aircraft to operate. AirAsia Japan was operating 5 domestic routes and 3 international. Even with such a small scale set up, AirAsia was seen to have capitalised on its expansion to Japan. Of course, the Star would publish any announcement made by Tan Sri Tony Fernandes, who is one of its directors, or anything done by AirAsia however trivial. Even a sale promotion announced by AirAsia will be treated as a worthy news!
on 11-7-2011 the Star saw it fit to hail AirAsia’s expansion to Japan as a milestone for AirAsia. Tan Sri Tony Fernandes has been quoted to have said “AirAsia Japan will not only boost economic growth between Asean and East Asia by providing better access to markets around the region but also enhance links within travel, trade and tourism.” Where is the growth?
Please also read “Tony Spin, Tony takes it up“ , “The GOOD do always eventually win” said Datuk Seri Tony Fernandes , “Another poor attempt at spinning” and ” Ular lidi, ular sawa, sekarang jadi anakkonda”.
How could such a small scale operations with 5 domestic routes and 3 international boost economic growth between Asean and East Asia when the competition is so stiff in Japan and its authorities are very strict on air safety regulations and labour law .
How could AirAsia Japan survive the stiff competition with no help from Japanese government. Japan is a totally different turf. Publicity stance will not help to push up the image of an airline. AirAsia must also take note that the turf in Malaysia has also changed because there is no Badawi Administration to assist. Hence, on 11-6-2013 ANA has announced that it is ending its “marriage” with AirAsia. Another failed expansion of AirAsia. Please read in HERE.
Airasia X Bhd and Tan Sri Tony Fernandes should tell the investing public whether it has handed over million of RM of airport tax for no-show passenger before they started with the road show to garner the support of the investing public. Please read in HERE, HERE & HERE.
Please also read the “AirAsia acquisition of Batavia Air in Indonesia” which eventually did not take off the ground. Must be due to “bad weather” again!
Asia X Bhd has also announced that it has to take delivery of some 7 more Airbus at the end of the year under the so-called EXPANSION plans. AirAsia Bhd seemed to have faced the same problem in 2009. Please read “AirAsia needs fund to reduce debts” in September 2009″
Yours truly is no accountant or stock analyst. Therefore, yours truly had to rely on what have been published in the public domains. According to certain well established printed media the IPO of AirAsia X is definitely a good buy but some analysts are not that keen.
Gone with the days of guaranteed profits on the opening price of IPO share prices. Therefore, yours truly hopes that the investing public must not be too gullible and taken in by greed for all IPO shares. Please read and consider all available facts before parting with your money.
Yours truly has stumbled over a few interesting articles which your truly feels that it is a must read.
On 2-11-2012 the blog of Serious Investing entitled “I think I’ll say X to Asia X IPO” but the article was written some 6 months ago. Since then AirAsia X must have performed superbly well for the past 6 months from November 2012 to June 2013 thus the IPO price of RM1.45 per share!
On 4-4-2013 Malay Mail published an article entitled “Analysts wary about AirAsia IPO” where it highlighted Alliance Bank Analyst quoted the collapsed of the low cost airline known as Oasis in Hong Kong as an example to support his argument.
On 22-5-2013 Ganesh Sahathevan wrote in his blog entitled “Would you buy what Richard Branson gave away: The Air Asia X IPO seems grossly over-priced”.
Just a reminder, during the height of the MAS-AirAsia share swap in August 2011, Tan Sri Azman Mokhtar, the MD of Khazanah, has once commented to several bloggers that the option for Khazanah to buy 10% of the shares of AA X under the infamous “MAS-AirAsia share swap” was a “DODGY DEAL“. Please read in HERE.
It has also been stated in the blog: “Smart & Intelligent” entitled “AirAsia IPO, is it a repeat of ASTRO?”. It ended with this remark: “Just as a heads up, last week Air Asia have stated that they will not exercise their option to buy AiAsiaX in the Bursa Announcement. If they believe the price can goes up why didn’t they exercise that option now? Just as a remark for you to think before invest”. Please read in HERE.
“Everyone Can Now Buy AirAsia X shares at 10 times its par value of RM0.15”.
Please use your own judgment before investing in the IPO of public listed companies in general.