Lion Air Investigates Initial Public Offering Possibility

Last March we reported that Lion Air was investigating the possibility of going public with an IPO. Well, it’s been just over three months and we haven’t heard very much from the Indonesian low-cost airline. Until now…

Lion Air Investigates Initial Public Offering Possibility
Lion Air is a budget carrier in Indonesia. Photo: Wikimedia Commons

According to a report by CH-Aviation, the president of the Lion Air Group is still reviewing Indonesia’s financial regulations to evaluate possibilities. This was all taken from an interview he had with daily finance and business newspaper, Bisnis Indonesia.

On June 27th he said the following:

“We are still reading the context of the law, regarding the IPO, the rules of the law. It’s not yet time to talk, because we talked about being canceled, which would violate the provisions of the law, but when it’s time we will explain” -Edward Sirait, President, Lion Air Group

The CH-Aviation report goes on to say that Lion Air Group is undergoing an “intensive study” regarding the regulations governing an IPO on the IDX – Indonesia’s Stock Exchange.

Sirait references the fact that his company needs to spend time examining “Law No. 8 (1995)”. This is a law concerning capital market regulations; the ‘unofficial English translation’ can be found here.

Already much consideration

The Lion Air Group has been considering an IPO for quite some time now. The announcement of their consideration has been made public several times in the last five years. Most recently, in July 2018, the Lion Air Group was listed as an attendee at an Ernst & Young IPO masterclass seminar in Jakarta. However, unfavorable currency exchange rates in combination with a weak national economy have made things difficult.

Lion Air 737 MAX
Lion Air has 10 737 MAX aircraft currently grounded. Photo: Flickr user
Bathara Sakti

Most recently, this past March there were reports that Lion Air was starting preliminary meetings with various investors to gauge interest, as well as help outline terms and conditions of any potential deals. Given all that has been happening in the last year with the crash of Lion Air flight JT610 and the subsequent grounding of all 737 MAX aircraft, the airline may still be dealing with too much turbulence to push this issue forward.

In fact, Lion Air has 10 737 MAX planes on the ground with another 139 on order. Unfortunately, there is still no end in sight for the 737 MAX crisis.

Featuring BAT

While Lion Air is the main feature of the Lion Air Group, other subsidiaries are an important part of the conglomerate’s business. These subsidiaries include:

  • Wings Air (Indonesia)
  • Batik Air (Indonesia)
  • Thai Lion Air
  • Malindo Air (Malaysia)

In his interview with Bisnis Indonesia, Sirait made note that the group was keen for some of the group’s subsidiaries to go public on the market. Most notable was Lion Air Group’s subsidiary Batam Aero Technic (BAT). Sirait says BAT is “very feasible to be made open to the public.”

BAT is a subsidiary that has its main focus on aircraft maintenance, repair, and overhaul (MRO). According to an older report by MRO Network, the company was keen to leverage its special location on Batam island to secure business from airlines in Singapore and Malaysia.

BAT began construction of its initial facilities on the island in 2013. However, it now has two hangars on the island capable of accommodating as many as twelve narrowbody or four widebody aircraft. Furthermore, a third hangar will handle up to six narrowbodies once it’s complete within one year, said Sirait.

Lion Air Investigates Initial Public Offering Possibility
Lion Air has an operational fleet of 106 aircraft (not including 737 MAX planes). Flickr user Andrew Thomas

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.