UPDATE 1-Mexico's Interjet airline calls off stock listing

Thu Jun 30, 2011 1:57pm EDT

* Investors, company don't agree on share price

* Questions about new Russian jets (Adds background, quotes from analyst)

MEXICO CITY, June 30 (Reuters) - Low-cost and airline Interjet, Mexico's second-largest carrier, made a surprise move to call off its planned listing on the Mexican stock exchange on Thursday, citing unfavorable market conditions.

On Wednesday, Interjet and its parent company ABC Aerolineas announced the listing in a newspaper notice but later pulled back the statement.

Interjet said in a statement it decided not to go ahead with its planned listing "at the moment" due to the "complicated situation" on financial markets.

One market source said investors were not willing to pay the price Interjet was hoping for after the company estimated its stock value at around 23 pesos per share.

"They didn't like the pricing and they decided not to go for it," the source said, asking not to be named.

Interjet, which launched in 2005 as a low-cost carrier and since then has gained more than 20 percent of the domestic market, was hoping to use the money raised from the IPO to help pay for new planes and expand its business in Mexico.

But some analysts were wary of a $650 million deal it signed with SuperJet International this year to acquire 15 Russian-made Sukhoi SuperJet 100 planes.

Interjet currently has a fleet of 22 planes made by EADS EAD.PA unit Airbus and could face complications operating two different fleets, airline analyst at Citigroup Stephen Trent said.

"They have switching costs now ... They need to pay for two sets of inventories to sets of suppliers," he said. "That's a tough conversation to have with an investor."

Interjet's public offering would have been the second airline listing in Mexico this year after market leader AeroMexico (AEROMEX.MX) made its market debut in April, raising $330 million for 18 percent of its capital. [ID:nN1E75S0DB]

On Thursday AeroMexico's stock was trading at 26.7 pesos per share.

Mexico's airline industry slumped during the economic downturn and the 2009 outbreak of swine flu that cut passenger traffic.

But both AeroMexico and Interjet are now benefiting from a pick-up in ticket sales as the economy improves, as well as from less competition after one of the country's largest carriers, Mexicana, was pushed to the brink of bankruptcy and stopped flying in August 2010. (Reporting by Veronica Gomez Sparrowe and Mica Rosenberg, editing by Gerald E. McCormick)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.