UPDATE 3-Lion Air to test investor appetite for stock market listing

SINGAPORE/HONG KONG (Reuters) – Indonesia’s Lion Air is launching a pre-marketing drive next week for a potential public float, three sources familiar with its plans said, as the airline seeks to win over investors more than a year after the fatal crash of one of its Boeing 737 MAX jets.

The carrier, one of Asia’s largest budget carriers with 112 planes, will begin investor presentations next week in Jakarta, followed by Singapore, Hong Kong and cities in Europe and the United States, said the sources who declined to be identified as they were not authorized to speak to the media.

A spokesman for Lion Air declined to comment and said it would update its stakeholders on any “material developments.”

No new target for the capital-raising has yet been set, but people familiar with the company’s plans have previously suggested a range of between $750 million and $1 billion.

Roadshows are a means for a company’s bankers to gauge investor appetite and detect any potentially thorny issues before the company commits to launching a deal.

BNP Paribas and Morgan Stanley are the international banks leading the deal. Both declined to comment.

A termsheet reviewed by Reuters said that the proceeds of any deal would go toward longer-term leases more akin to owning planes, as well as toward its general operations. Lion Air has one of the industry’s biggest outstanding orders with both Boeing (BA.N) and Airbus (AIR.PA).

Lion Air’s float plans come as the Indonesian market is stabilizing after years of overcapacity.

“There has been a dramatic change in the Indonesian market as all airlines reduced capacity and that resulted in significant increases in yields and therefore the market became profitable,” said Brendan Sobie, an independent aviation analyst based in Singapore.

The IPO also comes more than a year after the October 2018 fatal crash of a Lion Air Boeing 737 MAX that killed all 189 people on board.

The accident, followed within five months by another at Ethiopian Airlines, led to the global grounding of all Boeing 737 Max planes and triggered a crisis for the U.S. planemaker.

Last October an Indonesian accident report into the disaster focused on flaws in Boeing cockpit software, while also recommending better training at Lion Air and improved U.S. and local regulation.

Reporting by Anshuman Daga and Scott Murdoch; Additional reporting by Jessica Damiana in Jakarta; Editing by Sam Holmes, Shri Navaratnam & Kim Coghill

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