Oman’s first low cost carrier, SalamAir, is eyeing an initial public offering (IPO) as it expects to break even this year and make a profit next year. The airline, operating out of Muscat, has only been operating for three years. It thinks an IPO might be that far off again in the future.
A report in Ch-Aviation has SalamAir’s Chief Executive Officer Mohamed Ahmed looking to an IPO to take the budding airline to the next level. He said;
“Listing will come in time. Once we have three years of profitability, I’m sure the board and shareholders will want to take this company to IPO so we can fuel the next stage of growth.”
However, it’s slow and steady. With the airline not due to make its first profit until 2020, it will be 2023 before an IPO is contemplated if we go by Mr Ahmed’s timeframe.
Some background on SalamAir
SalamAir is one of those quasi-government owned airlines this part of the world is so good at producing. The airline is co-owned by Oman’s State General Reserve Fund, Muscat Municipality, and various pension funds. The airline has just seven aircraft, three A320-200s and four A320neos. SalamAir didn’t commence flying until early 2017. It now flies to 25 destinations in 14 countries, as far afield as Egypt, Bangladesh, and Georgia.
The three A320-200s are A4O-OVA, A4O-OVB, and A40-OVC. They were the first aircraft SalamAir received and they got them on lease from LATAM. The planes are nearly 13 years old. The four A320neos are A4O-OVD, A4O-OVE, A4O-OVF, and A4O-OVI. These are much newer aircraft, again all leased, but only A4O-OVD wasn’t sent to SalamAir new. This aircraft briefly spent some time with both Frontier Airlines and Air Cote d’Ivoire.
Since starting flights, SalamAir is yet to make a profit, but it is on track to do so and its financials have been trending in the right direction. Mr Admed said;
“This year we have managed to achieve a slight improvement in our budget, but we still have to finish this quarter. We should be able to announce a breakeven this year and start making a profit next year.”
An interesting strategy and mixed feedback
SalamAir has opened routes to a range of destinations at a decent clip. Part of its strategy appears to be flying direct routes that nobody else is flying on, rather than attempting to compete on already trafficked routes. Mr Ahmed has pointed out that before SalamAir started, no airline was flying between Muscat and Khartoum, Muscat and Multan, and Muscat and Alexandria Borg el Arab.
The airline gets pretty mixed passenger feedback. It has had some criticism for delays and perfunctory staff – that hardly makes it Robinson Crusoe in the low-cost carrier field. Others say the experience was fine, you just have to temper your expectations – again broadly true across the low-cost carrier environment.
The airline itself seems keen to distinguish itself from the full-service premium carriers in the region like Emirates. SalamAir sees its role as providing low fares to Omanis. That fact that it is in a position to contemplate an IPO suggests that there are enough people happy to cut back on service in exchange for cut-price fares.
Simple Flying has reached out to SalamAir for a comment on their proposed IPO but we haven’t heard back prior to publishing.