Indonesian budget carrier Citilink, a unit of state-owned carrier Garuda Indonesia, plans to expand its fleet to 50 planes and sell a 30 percent stake in a public offering by 2015, the company's CEO said on Friday.
The growth race among airlines in Southeast Asia is heating up after passenger traffic in the Asia-Pacific region more than doubled between 1998 and 2012, putting air travel activity on a par with North America.
But the region's low cost carriers are struggling to make a profit due to thin margins, with many lacking the huge cash flows required to sustain loss-making fares, find cash to acquire landing slots and fund new aircraft.
"This year we don't plan as a profitable company... in order to make sure we got the market share and we have to have enough capacity," Citilink's chief executive, Arif Wibowo, told Reuters news agency in an interview.
"We have to improve our performance and then we are considering an IPO."
The company posted a USD$28.4 million loss on operating revenue of USD$73.4 million in 2012. It aims to reach USD$1 billion in revenue by 2015 by flying 16 million passengers in 50 aircraft.
Citilink had 2.8 million passengers last year, while rival AirAsia had 4 million passengers. With its current 17 percent market share in the low cost carrier segment, Citilink is targeting 19 percent by the end of the year and 29 percent in the next 5 years.
That would mean more pressure on domestic market leader Lion Air and the region's biggest budget carrier AirAsia, which is struggling to expand in Indonesia despite a major push to set up a regional office in Jakarta.
Citilink is also planning a regional expansion next year, eyeing 7 destinations in Singapore, Malaysia, Thailand and northern Australia, Wibowo said.