February 2, 2011 / 9:02 AM / in 7 years

UPDATE 2-Indonesia's Lion Air eyes $1 bln-plus in 2012 IPO

* Plans expansion with $14 bln of planes from Boeing

* Secures $1 bln loan to buy 22 planes this year

* Analysts see strong growth potential

(Adds further details, quotes)

By Janeman Latul

JAKARTA, Feb 2 (Reuters) - Lion Air, Indonesia’s biggest airline by passenger volume, aims to raise more than $1 billion in an initial public offering (IPO) in 2012, its chief executive told Reuters on Wednesday.

The low-cost carrier has ambitious expansion plans, in a country where an increasing number of IPOs is seen in the next year, to take advantage of a buoyant capital market.

“We will ... use the IPO money as additional capital for our company as we have a huge expansion plan, but it doesn’t mean we badly need money. We have all the financing we need through loans,” said founder and CEO Rusdi Kirana.

Lion Air, which flies to a few Southeast Asian cities and across Indonesia, plans to expand by purchasing 178 planes worth $14 billion from Boeing Co (BA.N) by 2016.

It has a $1 billion loan to buy 22 planes this year, including 16 Boeing 737-900s, Kirana said. It expects to fly 20 million people this year, up from 17 million last year, he said.

“They have promising growth ... Looking at our population and because we’re an archipelago, the most ideal transportation is air,” said Alvin Pattisahusiwa, a fund manager in Jakarta at BNP Paribas Investment Partners, which manages about $3 billion.

    If Lion Air could win removal from a European Union list of carriers banned from operating to the continent, imposed after a string of Indonesian air disasters, expansion would be boosted.

    Analysts say Asian low-cost carriers have bigger expansion potential compared with established national carriers.

    Philippine budget carrier Cebu Air (CEB.PS) raised $538 million in an IPO last October.

    Indonesian flag carrier Garuda is set to raise $526 million in an IPO this month, half the $1.1 billion it targeted, after foreign investors were put off by pricing that valued it far higher than regional peers.

    Harry Su, head of research at PT Bahana Securities in Jakarta, said the air penetration rate in Indonesia is only 15 percent in the world’s fourth most populous nation.

    Airline executives say the Indonesian market is a bright spot in an industry still struggling to recover from the global financial crisis, though Mandala Airlines recently suspended flights because of debt problems.

    International air traffic slowed in November, according to industry body IATA, a sign the global recovery was slowing. Rising oil prices LCOc1 also pose a threat. (Additional reporting by Fathiya Dahrul; Writing by Neil Chatterjee; Editing by David Hulmes)

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