Air Astana Expects IPO Launch In 2013

October 10, 2012

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Air Astana, the flag carrier of oil-rich Kazakhstan, said on Wednesday it was looking to float at least 20 percent of its shares in a domestic initial public offering next year to support the company's growth plans.

The central Asian carrier, profitable since 2003, its second year in operation, is also planning a secondary listing in overseas markets, said president Peter Foster.

"In the future, there will undoubtedly be a secondary listing to enable us to access international capital markets and there will be the choice between London or Hong Kong or both," Foster, a former Cathay Pacific executive, told a news briefing in Hong Kong.

Under the country's privatisation plan, Air Astana, national grid KEGOC and state oil transportation firm KazTransOil, were among the first batch of companies expected to be floated this year.

Foster said, however, that Air Astana's IPO would probably take place in the third quarter of 2013.

Before the listing, the airline's two shareholders needed to agree on the size of the share sale, he said.

"Anything less than 20 percent will be too small and wouldn't provide sufficient liquidity," Foster told reporters in an interview after the briefing.

Air Astana is 51 percent owned by Kazakhstan's sovereign wealth fund Samruk-Kazyna and 49 percent is held by BAE Systems, Europe's largest defence contractor.

The company's first-half net profit net profit fell 80 percent to USD$4.9 million as fuel prices rose more than 140 percent.

But Foster said oil prices had come off year highs and a traditional strong second half should help lift full-year net profit to between USD$45 million and USD$50 million this year against USD$61.3 million in 2011.

Lifted by the booming economy of Kazakhstan, Air Astana has grown its net asset value to about USD$250 million from the original total investment of USD$17 million by its shareholders.

Although the carrier has not decided whether to issue new shares at its domestic IPO, it will have funding needs in the next few years for the acquisition of new planes.

"We don't need the money now, but by 2014 and 2015 when the pre-delivery payment kicks in for the Boeing 787s, it is going to put us into a much more comfortable position to have more cash than we have at the moment," Foster said.

Air Astana has orders to buy 15 planes, including three Boeing 787-8s, with a total list price exceeding USD$1.5 billion, to be delivered in the next few years to help expand its capacity by 10 to 15 percent a year.

It operates a fleet of 26 aircraft, entirely leased except for two Embraer 190s it owns.