AirAsia co-founder Conor McCarthy has said the Malaysian company’s long-haul budget carrier AirAsia X, which raised nearly 988 million ringgit (€235 million) in an initial public offering yesterday, will use the proceeds to pay down debt and expand its fleet.
Mr McCarthy, who is the executive chairman of Dublin Aerospace, said the IPO was five times oversubscribed, adding he was "very happy" with the flotation due to expectations that weak market sentiment may dampen the valuation.
“The stock market was very choppy for the last few weeks and you never know what’s going to happen when you’re doing an IPO. The IPO gives us good capital and we have a fairly healthy aircraft order.”
The flotation survived market turmoil brought on by concerns that the US Federal Reserve will reduce stimulus and China’s economic slowdown may deepen as a cash crunch worsens. The MSCI Asia Pacific Index tumbled by the most in two years on Thursday and is now at its lowest level in six months.
Working capital
The carrier plans to use 33.3 per cent of the proceeds to repay bank loans with another 32.6 per cent set for capital expenditures and 29.7 per cent as general working capital.
As part of an expansion plan, it will add 13 Airbus A330 aircraft in total this year and next to take its fleet to 23 aircraft by 2014.
AirAsia X and its shareholders offered 790.1 million shares to retail and institutional investors – or 33 per cent of the carrier’s enlarged capital – in the IPO, with the stock market debut set for July 10th.