Jin Air goes public and plans major expansion

Korean Air’s budget carrier Jin Air was listed on Seoul’s main bourse Kospi on Friday.

It is the second local low-cost carrier (LCC) to be listed on the stock market following Jeju Air, which went public in 2015.

The nine-year-old company hopes to aggressively expand its fleet and increase overseas flights.

“Listing on the stock market will be a stepping stone for Jin Air to become a leading LCC in all of Asia,” said Choi Jung-ho, CEO of Jin Air, in a speech Friday.

The airline vowed to add four to five planes to its fleet every year until 2020 with proceeds from the initial public offering. That will bring its fleet up to 38 planes, including 30 189-seat B737-800s - it currently has 20 - and from four to eight 393-seat B777-200ERs.

With the expanded fleet, Jin Air hopes to more than double its routes from 36 to 79, connecting 52 cities in the global market.

“Jin Air operates both small planes as well as mid-to-large planes and that could serve as a competitive edge for the company,” said Ha Jun-young, an analyst from Hi Investment and Securities. “The carrier can make larger profits on the same routes compared to competitors that only operate smaller planes.”

Ha added that Jin Air has stable finances and a solid brand image thanks to synergies with Korean Air.

The company also plans to expand overseas sales networks and recruit more foreign staff locally to ultimately increase the portion of overseas sales from 18 percent to 30 percent. Aggressive moves into foreign markets are necessary for local LCCs as the domestic market is saturated, according to analysts.

The company has been preparing for the IPO since April after hiring securities firm Mirae Asset Daewoo to oversee the process. The price of the airline’s shares was set at 31,800 won ($28.93), the upper end of the company’s desired price range of 26,800 won to 31,800 won. Based on the offered price, the firm could be valued at 954 billion won.

However, the closing price of Jin Air shares Friday was 28,850 won.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]