United Airways to submit IPO application to SEC by March
Wednesday, 24 December 2008
FE Report
Local private carrier United Airways will float its shares through the stock markets sometime in 2009, in what could be the first ever listed airline in the history of the country's capital market, its top executive has said.
The domestic airline, expects to submit a proposal to the Securities and Exchange Commission by March next to haul Tk 600 million (Tk 60 crore) via initial public offering (IPO), Tasbirul Ahmed Chowdhury, United's chief executive officer, has told the FE.
But analysts have remained wary of the carrier's seemingly aggressive move for the floatation, saying the global financial crisis coupled with a churning 2008- the worst year for the aviation history-could make the IPO process "challenging."
"Our board has given its consent (for the floatation). The public should stake on our success," Mr Chowdhury, also a pilot, said.
"The losses we made in the first year of operation are insignificant. Our liabilities are also minimal. We hope the carrier will swing to profits next year. This makes our case for listing compelling," he added.
The private carrier, 95 per cent owned by non-resident Bangladeshis, started its operation in July 2007 after purchasing a Dash-8 from its Canadian manufacturer Bombardier. It added another Dash-8 to its fleet in March this year and plans to purchase more aircraft in the next five years.
The United chief said the airline's losses totalled Tk 39 million in the first year of its operation ending June 2008, a figure Mr Chowdhury called 'insignificant.'
The airline, which has already captured 40 per cent share in the domestic market, would claw its way up to profits from 2009, he insisted, despite the global financial downturn and a litany of uncertainties that characterise the aviation industry.
Syeed Khan, a partner with private equity firm Asian Tiger Capital, predicted that "a negative environment"-locally and globally-would make the carrier's future share floatation challenging, even if prices of jet fuel fall further.
Legacy of its rivals, particularly those of GMG and Best Air, higher operating environment for Bangladeshi carriers, global financial downturn and margin pressure are the negative factors, Mr Khan said, would certainly weigh on United's efforts.
In May, GMG loped lucrative Dhaka-Dubai route on the back of bloated losses from record fuel price spiral, fierce competition and huge maintenance costs for the leased Boeing 747-300 aircraft. Later in September, the embattled airline, the country's first private airline, axed as many as 150 employees as it remained trussed up in dire financial straits.
Industry insiders say, Best Air is also not faring well, despite its rapid expansion and massive marketing drives. Best Aviation virtually withdrew from the domestic market and folded up its Dubai route after operating just 15 days.
Local private carrier United Airways will float its shares through the stock markets sometime in 2009, in what could be the first ever listed airline in the history of the country's capital market, its top executive has said.
The domestic airline, expects to submit a proposal to the Securities and Exchange Commission by March next to haul Tk 600 million (Tk 60 crore) via initial public offering (IPO), Tasbirul Ahmed Chowdhury, United's chief executive officer, has told the FE.
But analysts have remained wary of the carrier's seemingly aggressive move for the floatation, saying the global financial crisis coupled with a churning 2008- the worst year for the aviation history-could make the IPO process "challenging."
"Our board has given its consent (for the floatation). The public should stake on our success," Mr Chowdhury, also a pilot, said.
"The losses we made in the first year of operation are insignificant. Our liabilities are also minimal. We hope the carrier will swing to profits next year. This makes our case for listing compelling," he added.
The private carrier, 95 per cent owned by non-resident Bangladeshis, started its operation in July 2007 after purchasing a Dash-8 from its Canadian manufacturer Bombardier. It added another Dash-8 to its fleet in March this year and plans to purchase more aircraft in the next five years.
The United chief said the airline's losses totalled Tk 39 million in the first year of its operation ending June 2008, a figure Mr Chowdhury called 'insignificant.'
The airline, which has already captured 40 per cent share in the domestic market, would claw its way up to profits from 2009, he insisted, despite the global financial downturn and a litany of uncertainties that characterise the aviation industry.
Syeed Khan, a partner with private equity firm Asian Tiger Capital, predicted that "a negative environment"-locally and globally-would make the carrier's future share floatation challenging, even if prices of jet fuel fall further.
Legacy of its rivals, particularly those of GMG and Best Air, higher operating environment for Bangladeshi carriers, global financial downturn and margin pressure are the negative factors, Mr Khan said, would certainly weigh on United's efforts.
In May, GMG loped lucrative Dhaka-Dubai route on the back of bloated losses from record fuel price spiral, fierce competition and huge maintenance costs for the leased Boeing 747-300 aircraft. Later in September, the embattled airline, the country's first private airline, axed as many as 150 employees as it remained trussed up in dire financial straits.
Industry insiders say, Best Air is also not faring well, despite its rapid expansion and massive marketing drives. Best Aviation virtually withdrew from the domestic market and folded up its Dubai route after operating just 15 days.