Budget carrier AirAsia's plan to acquire some 80 new aircraft is on track despite its initial public offering (IPO) raising less funds than first indicated, a senior official said today.

AirAsia set the price for the institutional tranche of its IPO at RM1.25 per share and the retail tranche at RM1.16, well below the indicative price of RM1.40.

AirAsia Executive Director Kamarudin Meranum told AFP that the issue price for the institutional and retail tranches was "more than enough to fulfill our expansion plan and to build up our war chest.

"The board believes that the minimum value of the company is RM1.20, in line with the IPO price," he said, when asked to comment on fears that the carrier's expansion plans may suffer.

AirAsia said previously that it planned to use the funds from the IPO to increase its fleet to 80 aircraft. It currently operates a fleet of 24 Boeing 737 aircraft on some 322 flights a week from Kuala Lumpur International Airport to 14 domestic and eight international destinations.

Plan on track

Analysts had expressed some concern that the lower than expected price for the IPO could have hurt the fleet expansion plan but Kamarudin said AirAsia only needed a minimum of RM1.20 to meet its financing needs.

"If we had put the indicative price lower than RM1.40, it may have been lower (still) so we put it at RM1.40 and we got RM1.20. We are happy. Our wings are intact. There is no need to reschedule anything," he said.

Kamarudin said the carrier was happy with the strong response to the IPO and the investor profile.

The institutional tranche was 3.5 times subscribed and the public tranche, the largest ever for a Malaysian IPO, was 1.5 times subscribed, with the IPO raising some RM717.4 million. The stock will list on Nov 22.

Asked about the planned acquisition of an Indonesian carrier, Kamarudin: "I am flying to Jakarta today. The plan is on track. We hope to conclude the deal by year-end or the latest in the new year."