China Airlines Ltd (CAL, 中華航空) is to sell NT$1.84 billion (US$59.2 million) of Tigerair Taiwan Ltd (台灣虎航) shares ahead of the low-cost carrier’s (LCC) initial public offering (IPO) in the fourth quarter.
CAL holds 180 million shares, or a 90 percent stake, of Tigerair, higher than the Taiwan Stock Exchange’s (TWSE) limit of 70 percent stake that a parent company could have in a publicly owned subsidiary.
CAL this month is to sell 45 million shares to its own shareholders at NT$41 per share, cutting its holding of Tigerair to 67.5 percent, CAL spokesman Jason Liu (劉朝洋) told the Taipei Times by telephone.
The price is much higher than CAL’s share price of NT$9.79 in Taipei trading yesterday, as Tigerair’s profits have grown steadily since 2017, Liu said, adding that the subsidiary would reveal its net value this month.
The proposed sale, which is to be completed in late September, would help CAL recover from a 75 percent plunge in pretax profit in the first quarter due to a pilot strike, Liu said.
Mandarin Airlines (華信航空), another CAL subsidiary, has a 10 percent stake in Tigerair, or 20 million shares, but has no plans to sell the shares, Liu said.
Tigerair plans to make its debut on the Taipei Exchange’s Emerging Stock Board in December and to move to the main bourse “in the fourth quarter next year” at the earliest if its application is approved by the TWSE, CAL said.
“Tigerair, the most profitable subsidiary of CAL, would be the nation’s first publicly traded LCC,” Liu said. “We would like to know whether investors are willing to buy Tigerair shares based on its promising outlook.”
Tigerair, launched in 2014, has seen passenger numbers and profits grow steadily since 2017.
Revenue rose 12.7 percent annually to NT$2.51 billion in the first quarter, Tigerair communication officer Emily Yu (于煥永) said by telephone.
It has 11 Airbus A320 single-aisle aircraft and operates 29 international routes, including two routes from Taiwan to the Philippines launched this year, Yu said.
Tigerair in March said that it would expand its fleet to facilitate faster growth.
The company has not finalized details of the plan, such as the number of aircraft to be purchased, she said.
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