Lion Air Is Planning A $1 Billion IPO

Lion Air, the airline unfortunately famous for its Boeing 737 Max 8 tragedy late last year, is preparing to list itself on the stock exchange.

The airline has been planning to raise up to $1bn in funds for future expansion for some time, but has held off its IPO awaiting the final Lion Air JT610 air crash report.

Lion Air
Lion Air has one Boeing 747 that they use for special occasions. Source: Wikimedia

What are the details?

The Indonesia airline is planning some big moves, and is looking for capital to do it. Sources speaking to Bloomberg have said that Lion Air has wanted to be listed on the domestic stock exchange since 2005, but has held off due to a myriad of issues. These have included a weak indonesian economy (due to the global financial crisis) to timing with presidential elections (happening next in April 2019).

Lion Air has started preliminary meetings with various investors to help outline terms and conditions of any deal, as well as to gauge interest. If it looks like there would be enough interest, we expect Lion Air to list as early as May 2019.

The billion dollar goal would make this share offering one of the biggest ever in the nation, and for good reason. Lion Air currently has 125 aircraft (10 of which are the Boeing 737 Max 8) and another 249 on order. They fly across South East Asia to 126 destinations from three hub airports (Jakarta, Surabaya, and Medan), and operate five different subsidiary airlines. Essentially, they are a juggernaut with a 41.6% control of the local market. Any investor would be very keen to get their hands on a slice of this company.

Lion Air
Lion Air Boeing 737 Max 8. Source: Wikimedia

What would Lion Air spend the money on?

Now, this is all speculation, but we do know a few things that Lion Air may be planning to do with their money.

  • Replace their orders of Boeing 737 Max 8 aircraft. Lion Air currently has 186 Boeing 737 Max 8/9 aircraft on order, and 50 Boeing 737 Max 10 aircraft on order. They have said that they want to cancel all the orders if the right Airbus plane can be found. This would probably involve some hefty cancellation fees for Lion Air to cover. Then, of course, further funding would be required for an Airbus order (potentially the A220 or A321neo).
  • Expand their fleet of long haul aircraft. It’s time for Lion Air to compete with Air Asia X with cheap long haul fares across Asia.

Lastly, we at Simple Flying would like to mention that this article is for entertainment purposes only. We do not work for Lion Air and nor do we offer any suggestion if you should or should not buy in their IPO.

What do you think? Is it a good idea for Lion Air?