Transformation and preparation for the national airline’s IPO to be accelerated

President Shavkat Mirziyoyev was presented with plans to accelerate the transformation of Uzbekistan Airways and preparations for its IPO.

In recent years, systematic efforts have been made to reform major state-owned enterprises and introduce international standards of corporate governance and reporting. An important step in this process was the establishment of the National Investment Fund and the engagement of Franklin Templeton to manage it.

Last month, the National Investment Fund placed assets worth $690 million on international markets for the first time. This demonstrated Uzbekistan’s readiness to operate under the rules of global capital markets. During the offering, demand exceeded supply fourfold, with bids totaling nearly $3 billion.

The task now is to accelerate the transformation of the 13 major companies in the fund's portfolio and prepare them for IPOs. In particular, work is planned to be completed this year on companies including Uzbekistan Airways, Uzsanoatqurilishbank, Uzbekhydroenergo, National Electric Grids of Uzbekistan, and Uzbektelecom.

The presentation reviewed the organization of these processes using the example of Uzbekistan Airways.

Representatives of Franklin Templeton conducted an assessment of the national airline's operations and developed a transformation program comprising 115 measures. According to estimates, full implementation of the program could increase the company's annual operating profit by $120 million.

In particular, it was noted that additional revenue could be generated through route optimization, increased direct sales and improvements to customer service, shorter intervals between flights, fewer flight cancellations and delays, greater efficiency at the company's catering and maintenance enterprises, as well as through the timely adaptation to market conditions and the attraction of qualified specialists.

As a result of these measures, the airline's market value could increase from $1.6 billion to $2.3 billion. The President noted that although the program was developed several months ago, the pace of its implementation remains slow.

The Head of State emphasized that, in order to prepare the company for international capital markets, it is first and foremost necessary to significantly improve the quality of management, strengthen financial discipline, maintain reporting in accordance with international standards, and improve the company's credit rating.

The goal is to offer 15-20 percent of the national airline's shares through an international IPO by the end of the year. To this end, practical measures have been identified to ensure an objective assessment of the company's performance, increase its investment attractiveness, write off specialized aircraft from its balance sheet, and introduce a compensation mechanism for services provided under state orders.

The presentation also highlighted that the rapid growth of the tourism sector is placing new demands on the airline. Since the beginning of the year, the number of tourists visiting Uzbekistan has increased by 27.5 percent, reaching nearly 5.5 million. Particularly strong growth has been recorded in arrivals from China, Malaysia, Japan, and the United States.

At the same time, it was noted that the national airline has been slow to adapt to this growth. Delays have been observed in the expansion of its aircraft fleet.

To address this, the President set the task of establishing a separate procurement procedure for the airline, ensuring prompt decision-making on fleet expansion, and introducing international practices in these processes.

President Shavkat Mirziyoyev emphasized that all the necessary conditions exist to transform Tashkent into the largest aviation hub in Central Asia. To achieve this, it is necessary to ensure coordinated interaction among Uzbekistan Airways, Uzbekistan Airports, and the New Tashkent Airport within a unified system, and to develop infrastructure, routes, and the transit network in an integrated manner.

Responsible officials were instructed to establish a separate project office for the systematic organization of the transformation of companies in the National Investment Fund's portfolio, attract specialists with deep knowledge of international financial market requirements and practical experience to their management bodies, develop a clear IPO preparation schedule for each company, and ensure strict control over its implementation.