A sanguine outlook is expected for Jeju Air, South Korea’s largest low-cost airline owned by Aekyung Industrial, ahead of its initial public offering set for the second half of the year.

With a growing number of Korean passengers opting for no-frills airlines to cut costs, Jeju Air has been expanding its market share ― both in domestic and international flights ― as the country’s first budget carrier since it took to the skies in 2005. 

Now the airline is hoping to raise up to 200 billion won ($178.9 million) from the IPO, with the proceeds to be used for corporate purposes, including working capital and operating expenses, according to industry sources.

“The airline’s planned launch of new international routes in 2015 and the arrival of new aircrafts will have a positive effect on the company’s performance,” Jeon Yong-ki, a Hyundai Securities analyst said.

He added that the airline’s sales and net profit for this year have been revised upward to 574.7 billion won and 54.7 billion won respectively, up 2.5 percent and 26 percent from the previous forecast.

This year, the airline plans to add four more Boeing 737-800 to its existing fleet of 17 aircraft of the same type, which are being used by budget carriers for relatively close range international destinations.

“There’s no specific plan for expansion for long-haul routes or purchase of bigger type of aircraft for this year,” a Jeju Air spokesperson Yoon Ye-il said.

The 10-year-old airline suffered losses in its first six years of operation before posting a turnaround in 2011.

Since then the airliner has been busy recording a whopping increase in profits, beating out all foreign legacy and low-cost carriers.

It became the third largest carrier at Seoul’s Incheon Airport after Korean Air and Asiana Airlines, thanks to Jejudo Island, its home, becoming a top destination for tourists from China and Southeast Asia.

In total, the budget carrier’s accumulated sales in 2014 are estimated to reach 378 billion won, with net profit reaching 22.6 billion won. It now operates 25 domestic and international routes.

Jeju Air flew 2.15 million people in and out of Korea last year, the largest share among budget carriers. Jin Air and Air Busan came next with 1.36 million and 1.26 million, respectively.

Following Jeju Air’s IPO, other budget carriers are following suit, with Busan Air ― an affiliate of Asiana Airlines ― planning to list on the stock market.

NH investment & securities is the lead underwriter for the Jeju Air’s offering.

By Park Han-na  (hnpark@heraldcorp.com)