Malaysia's ambitious budget carrier AirAsia is expected to raise as much as RM1 billion in its initial public offering (IPO) due in November, industry sources said today.

"It could be about one billion ringgit, making it the biggest share sale this year in Malaysia," a source familiar with the listing exercise told AFP .

"The share offering is likely to happen in the middle of November," the source added.

The Foreign Investment Committee has approved the IPO and the airline is now awaiting final approval from the Securities Commission and its management board.

AirAsia in March said it had appointed Credit Suisse First Boston and RHB Sakura Merchant Merchant Bankers as the bookrunners for the IPO.

Asked if the offering would attract investors, the source said: "We are confident it will be well received."

From its humble beginnings with just two Boeing 737-300 jets in 2001 plying Malaysia's domestic routes, AirAsia has expanded at a furious pace.

It flies to 30 destinations in Malaysia and the region, including neighbouring Singapore, Thailand, Indonesia and Macau and hopes to fly to China by year-end.

The source said talks with Chinese authorities were proceeding smoothly and AirAsia expected to fly to Kunming in southern China in December.

AirAsia was also looking to launch flights from Bangkok to Chongqing and Chengdu, Hainan Island and Guangzhou in China.

Good track record

Suhaimi Saidi, economist with AmSecurities, said one important factor that would likely attract investors was the proven track record of the AirAsia management team under chief executive officer Tony Fernandes.

"I am upbeat the IPO will get a good response because of the proven management track record," he said.

The industry source said the price war with new rival, Singapore's Tiger Airways, would not hurt AirAsia's profits.

"Tiger Airways is not a threat to AirAsia. Remember the competition is only on one of the 30 routes AirAsia flies," the source said.

AirAsia expects to carry about 7.5 million people in 2005 after 6.0 million in 2004.

The airline plans to expand its fleet to 26 next year from the current 18. It now operates only Boeing 737-300s.

In June, the carrier announced that it would acquire up to 80 new aircraft over the next four to eight years to cater for regional expansion.

The carrier also has a 49-51 joint venture low-cost airline in Thailand with Thai telecommunication giant Shin Corp. owned by the family of Thai Prime Minister Thaksin Shinawatra.