KUALA LUMPUR: Tune Group Sdn Bhd is still weighing the opportunity of initial public offerings (IPO) of Tune Talk Sdn Bhd and Tune Hotels Regional Services Sdn Bhd, said its co-founder and executive chairman Tan Sri Tony Fernandes.

He added that no timeline has been fixed for the two listings.

“I think that both Tune Talk and Tune Hotels are candidates for IPOs. I think the profitability of Tune Talk is growing very, very quickly,” he told a press conference after the opening of Tune Group’s new headquarters at Wisma Tune here yesterday.

Fernandes as far back as April 2011 said Tune Hotels may go public in early 2013 to expand its hospitality network. The budget hotel operator’s IPO was once again touted to be held this year after the launch of AirAsia X Bhd’s IPO in June 2013.

Fernandes also noted that AirAsia X Bhd is set to spread its wings by year-end to Hawaii, London and a new destination in Europe that it is not ready to reveal yet, as part of its plan to drop underperforming routes and add more promising ones to meet its forecast of returning to profit this year.

“Within the next eight months, we will be in Hawaii, London and another destination in the European Union (EU),” Fernandes, who is AirAsia Bhd group chief executive officer (CEO), said. “We are very excited about the EU. We have to be in the EU,” he added.

The long-haul, budget airline currently flies to destinations in the Asia-Pacific region.

Fernandes said AirAsia X’s presence in the United States and the EU will showcase the airline’s ability to meet the aviation standards of these countries and [the] region, which increases the AirAsia brand profile “in a dramatic way”.

AirAsia X group CEO Datuk Kamarudin Meranun said the loss-making affiliate of AirAsia (fundamental: 0.2; valuation: 0.8) is still in the midst of streamlining its operations and reducing costs.

“In the past two months, we were able to plan out our internal organisational restructuring. There were some operational inefficiencies and redundancies,” he added.

Kamarudin said the results of the streamlining and cost efficiency exercises will be apparent in the second half of this year, when the airline will be able to capitalise on the high year-end travelling season.

“We have the benefit of the last quarter. So, we must have a model to capitalise on that,” he added.

Kamarudin also said fluctuations in foreign exchange rates and fuel costs continue to pose a challenge for AirAsia X as 70% of its expenditures are exposed to fluctuations of the US dollar.

Meanwhile, Fernandes acknowledged that the AirAsia management is disappointed with the shedding of its share price over the past three months due to foreign selling, spurred by the weaker ringgit and the impending entry of new airline, flymojo. Year-to-date, the AirAsia stock has fallen 16.18%. But he remains confident that AirAsia’s financial performance, which he expects to be positive this year, will help boost AirAsia’s share price.

For the financial year ended Dec 31, 2014 (FY14), AirAsia’s net profit fell to RM82.84 million from RM362.12 million in FY13. Revenue was 6% higher at RM5.42 billion compared with RM5.11 billion.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on April 7, 2015.