Jeju Air preps for November IPO

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Jeju Air preps for November IPO

Jeju Air, the country’s biggest low-cost carrier (LCC), is planning to announce its public initial offering at the end of this month after several profitable years of short-distance flights, market insiders said Monday.

It will be the third aviation company listed on the Korean stock market, following Korean Air (offered in 1966) and Asiana Airlines (1999). It will be the first Korean LCC to be offered on the market.

The company will launch internal studies on demand for shares Wednesday and Thursday, and its IPO will open for subscription on Oct. 28 to 29. The target price range is between 23,000 won ($20.52) and 28,000 won, sources said, and trading on the shares will start from Nov. 6. A total of 25,906,758 shares will be issued after the company is listed.

The largest shareholder is likely to be AK Holdings, expected to hold a 57 percent stake.

Jeju Air was jointly established in 2005 by the Jeju Island government and Aekyung Co., and is second-oldest LCC following T’Way Air. Jeju Air is also the first LCC in Korea to operate international flights.

The company survived a shaky start and recorded a surplus in net profits starting in 2011 with 1.6 billion won. As of the end of September, it held the largest market share among LCCs by accumulated number of passengers from Incheon International Airport, accounting for 31.5 percent. It also recorded the highest sales in 2014 among LCCs at 510 billion won.

Market traders presented optimistic outlooks for the company, particularly in its short-haul flights to Japan, China and South Asian countries.

“Korea’s LCC market will expand to a size of 3.7 trillion won in total sales in 2020, from 1.8 trillion won last year,” said Ha Jun-yeong, an analyst at HI Investment & Securities. “Jeju Air would be the most attractive firm, as it is gradually improving profitability with a management strategy of ‘sell cheap, still earn more.’”

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