Low-cost carrier Tigerair Taiwan Ltd (台灣虎航) said it is pursuing an initial public offering (IPO) and hopes to list on the main board next year at the earliest, after its parent company, China Airlines Ltd (CAL, 中華航空), approved the plan on Monday last week.
It is not clear how much Tigerair Taiwan plans to raise from the IPO, as the company still needs to meet with underwriters, CAL spokesman Jason Liu (劉朝洋) said on Friday last week.
The proceeds from the offering would be used to expand the business, but would not include mergers and acquisitions (M&A), Liu said.
“So far, we do not have any plans to let Tigerair Taiwan acquire other low-cost carriers, as it is not easy for state-owned companies to initiate M&As, nor do we see the necessity for it,” Liu said in a telephone interview.
The budget airline, launched in 2014, has been profitable since 2017 and grown steadily in terms of passenger numbers and profits, Liu said.
The plan to go public would allow Tigerair to raise more capital to fuel future development and increase its equity value, he said.
“Of course, there are also drawbacks to an IPO. CAL would have to reduce its control over Tigerair Taiwan, and would need to offer financial reports and disclose more information to the public, but we think the advantages outweigh the disadvantages,” Liu said.
CAL would need to lower its shareholdings in Tigerair to 70 percent to enable the subsidiary’s listing, according to Taiwan Stock Exchange regulations, Liu added.
Tigerair Taiwan reported net losses of NT$1.5 billion (US$48.66 millin) in 2016, but swung into profit in 2017, with a net profit of NT$573 million. In the first three quarters of last year, net profit reached NT$1.02 billion.
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