Adam Air to seek Singapore listing in 2007: President

Adam Air to seek Singapore listing in 2007: President

Abdul Hadhi, Dow Jones/Singapore

Indonesian airline Adam SkyConnection Airlines (Adam Air) intends
to seek a listing in Singapore sometime in 2007 after making the
city-state a second hub for its operations, its President Adam
Adhitya Suherman told Dow Jones Newswires late on Wednesday.

"We intend to go for an initial public offer in 2007, probably
in Singapore. Our family used to do stockbroking and we believe
that is the way to go," Suherman said in an interview after
attending an aviation industry conference held in Singapore.

Ahead of the listing, the airline intends to make Singapore
its second hub and introduce flights from the city-state to other
parts of the region such as Kuala Lumpur, Bangkok, and to Indian
cities such as Chennai and Bangalore.

"Singapore has given Indonesia fifth freedom rights and we can
make use of that to add new destinations," Suherman said.

Fifth freedom rights allow an airline to take passengers to
one destination where more passengers can be picked up before
flying on to another location.

For example, Adam Air can fly passengers to Singapore and then
pick up new passengers to fly to another city.

Routing flights through Singapore in this way would allow Adam
Air to exploit the city-state's status as a travel hub with its
large numbers of potential passengers, either in transit or who
are starting their journey there.

Regional rivals such as Singapore Airlines' associate Tiger
Airways and Malaysia's AirAsia bhd. are already looking at using
Manila as a second hub to mount flights to Macau and southern
China to expand their network.

Ahead of such plans, the airline -- which calls itself a
boutique airline and not a low cost carrier (LCC) as it offers
refreshments and assigned seating -- will start daily flights
between Jakarta and Singapore on Friday.

The plans are ambitious but Adam Air, which started commercial
flights in December 2003, has shown that it's capable, Suherman
said.

While budget airlines, which are closest in style to Adam
Air's business model, take around three years to just break-even,
Suherman said Adam Air turned in a profit in its first year.

He won't say how much it made or how much growth it expects to
see in its second year, except that the airline's fleet grew from
two planes to 19 planes currently and load factors are at 80
percent-85 percent.

Load factors are a measure of how many passenger seats and
cargo space an airline can fill.

The airline competes domestically with Lion Air, Citilink and
AirAsia associate PT AWAIR, and targets the middle segment
between the LCCs and legacy airlines such as national carrier
Garuda Indonesia.

"We have to fight with over 20 airlines serving the same
routes. Airlines have to adjust their model according to what the
market likes," Suherman said, explaining why Adam Air offers a
bit more than the LCC model.

Using that strategy, the airline aims to carry 10 million
passengers by end-2006 and gain a 30 percent share of the
domestic market.

Suherman didn't say what the airline's current market share
was.

New destinations will add to passenger growth.

After Singapore, flights from Jakarta to Kuala Lumpur and
Bangkok are expected to start early next year. Flights from Bali
to Perth have been delayed somewhat after the recent bomb blasts
on the Indonesian island, Suherman said.

Adam Air is assessing the impact on Australian tourist
arrivals in Bali but expects to commence flights next year.

The airline currently flies to 19 destinations, including one
overseas destination -- Penang. Its busiest routes are Jakarta to
Medan and Jakarta to Surabaya.