AirAsia, which wants to be Asia's leading low-cost carrier and is negotiating to acquire up to 80 new planes, had priced its US$226 million (HK$1.763 billion) initial public offer below its own indicative price last month, ensuring the shares went to market oversubscribed.

``We are quite happy with what we have got,'' Chief Executive Tony Fernandes said when asked if he was disappointed with the IPO price. ``Our main focus is not on the [share] price; it's on delivering the numbers,'' he added. AirAsia has forecast net profits to triple between 2003-04 (July-June) and 2004-05.

The stock, sold to institutions at 1.25 ringgit (HK$5.90), hit a high of 1.45 ringgit in Kuala Lumpur before closing up 12 per cent at 1.40, giving AirAsia a market value of about US$860 million. This was still below the original indicative price of 1.51.

AirAsia, founded three years ago by a group including Fernandes, a former music industry executive, is hoping to emulate the success of European low-cost carriers like Ireland's Ryanair Holdings and Britain's EasyJet.

Aided by a liberalising airline market in the European Union, budget airlines helped drive growth in air travel, making money despite tumbling ticket prices.

AirAsia, whose board includes a former Ryanair operations director, sought to convince investors in the run-up to its IPO that Asia was still a decade behind Europe, with national aviation markets at a relatively early stage of deregulation.

One aviation analyst said low-cost carriers could open a potentially huge market in Asia, especially in populous countries like China, India and Indonesia, as ticket prices fell to the point where planes became an alternative to trains and buses.

But the analyst, based in Singapore with a European bank, noted that European fares were relatively higher when budget airlines took off there. ``The difference is that Asia does not have the high fares to begin with,'' he said. One of the biggest prizes is low-cost travel to China, where a huge and growing middle class is expected to change the face of global tourism.

AirAsia said on Monday it would focus initially on Indonesia, a key part in its plan to grow in Southeast Asia, home to 500 million people. It is forming a joint venture in Indonesia with local partners to operate out of Jakarta's main airport.

The carrier's market price is about 19 times forecast earnings per share of US7.47 cents for 2004-05, a premium to the wider market's multiple of 13 times and to full-service rivals like Singapore Airlines, which trades at around 12.

It is fetching around the same multiple as Ryanair, though IPO investors baulked at the PE of 20 indicated in the prospectus, conscious of high oil prices and rising competition.

Low-cost airlines are mushrooming across the region, sparking price wars and putting further pressure on carriers to cut costs. Hungry for capital, some of these rivals may also look to list.

They include Tiger Airways, owned by Singapore Airlines and Ryanair's founder, and India's Air Deccan. Australia's Qantas Airways launched its 49 per cent-owned discount carrier, Jetstar, in Asia in September.