Air Astana chief says London’s ‘powerful’ governance framework is key pull for investors
The chief executive of Air Astana has said concerns over the Kazakh flag carrier’s London listing have proved “largely unfounded.”
In an interview with Morning Wire, Peter Foster shrugged off prior concerns. “It did go off absolutely according to plan and, you know, we’re very pleased that has taken place,” he said.
“As we said during the early discussions that we’ve had… one of the primary attractions for London was not just you know, the London-based funds and the London-based institutions, but also the the corporate governance framework, which is very powerful and which is absolutely seen as a positive, not only by ourselves, but I think also the local investors here in Kazakhstan feel very comforted that the company is now governed in accordance with those procedures.”
Foster said the airline, which holds a seperate listing in its home country, would use the $120m (£94m) raised via the IPO to invest in “key infrastructure” at its principal airports. “We’re in a position to be able to forge ahead with those investments, which are under discussion as we speak.”
His comments came after Air Astana reported record passenger numbers in its annual results. Profits also rose, when factoring out extraordinary market events and fuel hedging.
Ahead of its entry to the London Stock Exchange, the Kazakh state-owned carrier had warned investors about a number of risk factors impacting the airline industry.
The price of jet fuel has risen in recent years in response to Russia’s invasion of Ukraine and, more recently, resurgent conflict between Israel and Hamas in the Middle East. Closer to home, geopolitical insecurity in the central Asian state has affected the price of liquefied petroleum gas and resulted in damage to local infrastructure.
The firm takes two-thirds of its fuel from local Kazakh refineries and fuel companies. “That cost comes at a delta of anything between sort of 15 to 20 per cent of what we’re paying at airports outside of Kazakhstan,” Foster said.
“As far as fuel outside of Kazakhstan is concerned, we are fully hedged. For the whole of the first half of this year we are hedged at a level just marginally lower, in fact, than the fuel price as of yesterday evening… And so we are in pretty good shape on that.”
The airline is also grappling with widely reported supply chain issues affecting its GTF engines, supplied by Pratt and Whitney. Due to inspections, Wizz Air has already been forced to slash capacity by 10 per cent in 2023.
Air Astana has scheduled 32 engine removals from its 28 A320neo aircraft which use the devices. Foster told Morning Wire the issues would result in “considerable expense” but that the airline was “very close to a satisfactory compensation deal with Pratt and Whitney.”
“That is yet to be finally signed off on but it is imminent and it does meet our expectations.”