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Singapore. Low-cost Indonesia carrier Lion Air has postponed plans for a 2012 flotation worth more than $1 billion, its chief executive and co-founder said, bowing to uncertainty over the readiness of Asian investors to back new share offerings in volatile markets.

Lion Air, Indonesia’s biggest carrier by passenger volume, has ambitious plans for expansion as the archipelago nation expands its poorly served air corridors, and has placed a record provisional order for more than 200 Boeing jets.

“We can’t do it this year because the situation with the financial crisis is not so good,” CEO Rusdi Kirana said in an interview on the eve of the Singapore Airshow.

He said Lion Air had a domestic airline market share of 51 percent and aimed to go public when this reached 60 percent, something he estimated would happen “in the next two years.”

Shares in flag carrier Garuda Indonesia had a weak debut last year and have traded below their flotation price — a sign that IPO investors remain cautious despite Indonesia’s economy being relatively shielded from Europe’s debt crisis.

Kirana, who branched out from the travel business to start the airline with his brother Kusnan in June 2000, insisted Lion Air did not need the funds it would have raised from the IPO to pay for deliveries of aircraft on order from Boeing.

The airline grabbed world attention in November by placing what could become Boeing’s biggest ever commercial order, worth $21.7 billion at list prices. Europe’s Airbus has accused the United States of applying political pressure to secure the deal.

The provisional order for 230 short-haul jets, signed in the presence of President Barack Obama, takes Lion Air’s order book to more than 400 planes, which it aims to use to fly across an Asia-Pacific region still seeing robust passenger growth.

Safety Concerns Dismissed

Its fleet of 92 aircraft also includes European ATR-72 turbo-props built jointly by Airbus parent EADS and Italy’s Finmeccanica. Demand to feed traffic from Indonesia’s 17,000 sometimes remote islands that span three timezones is expected to grow.

With a poor rail and road infrastructure, air travel is the only way for the world’s 12th busiest domestic market to tap its potential and there is plentiful margin for growth, Kirana said.

Indonesia is the world’s fourth most populous nation with 230 million people, but has barely half the domestic traffic generated by Malaysia’s 28 million people. Indonesia’s average annual passenger growth is 21 percent, according to the airline.

Lion Air, whose competitors include Malaysia’s AirAsia, says low costs allow it to offer tickets for $40-$60.

Kirana however rebuffed criticism of the airline’s lean operating model and European Union concerns over its safety.

Two pilots have been arrested over drugs in recent weeks.

“Rumors said my pilots work too hard so they use drink and drugs... People make up stories to discredit us. We came to see the drugs agency and we asked them to check everybody,” he said, adding he was also building 1,000 homes for the airline’s staff.

Kirana also told a group of European journalists he could not understand why Lion Air remained on a blacklist of airlines banned in the EU, while Garuda and five others now had waivers.

The black list of carriers banned from the 27-nation EU over alleged shortfalls in safely standards has included Lion Air since 2007 and originally included all Indonesian carriers.

Indonesia had 33 plane accidents between 2005 and 2010 and accounted for 1.4 percent of global traffic but 4 percent of accidents in 2010, according to airlines association IATA, which last year urged Jakarta to pay attention to safety oversight.

Lion Air has had only one fatal accident, in which 25 were killed when a McDonnell-Douglas MD-82 overran a runway in 2004, Kirana said, a claim backed up by the Aviation Safety Network.

The airline has stopped flying those jets. Kirana said a handful of other occurrences had been classified as “incidents.”

The UN’s aviation agency ICAO defines an air accident mainly as something causing death or injury and an incident as a weaker type of event that could still affect safe operation.

“I don’t care if the EU wants to blacklist me. Indonesia is my market, but I want fair treatment,” Kirana said.

Regional specialists say the issue overshadows France-based Airbus’s prospects of selling to Lion Air, but Kirana said the EADS subsidiary was in the race for business worth $2 billion.

He said Lion Air was in talks to buy 10 long-haul Airbus A330 jets or Boeing 787 Dreamliners. The aircraft would be used to open up routes to Japan and China from the minerals-rich east of the country, which is attracting foreign mining investment.

Reuters