FlyNess IPO: A Buy Call on Saudi Arabia's Low-Cost Airline

Darshan took on the FlyNess analysis as his first project for the family office, covering a low-cost airline entering the Saudi market through an IPO. The brief was to form a view on whether the business was worth backing, and there was no clean Saudi comparable to anchor the work.

He started by understanding the business model: the hub-and-spoke route structure, key operating KPIs like RASK and ASK, and how FlyNess managed fuel costs and hedging. He read the annual reports and available sell-side research, then built a bottom-up view of the TAM, factoring in Saudi Arabia's growing aviation market and Vision 2030 expansion goals.

He built a blended valuation model combining DCF (free cash flow to firm and free cash flow to equity) with relative valuation using international peers including Ryanair, Wizz Air, and IndiGo. The most sensitive assumption was the discount rate, which he worked through with the internal team using Damodaran's equity risk premium framework adjusted for Saudi-specific sector premia.

The near-term picture showed fuel costs eating heavily into revenue, leaving operating cash flows negative in the early years. Darshan's read was that this was a stage-of-cycle problem, not a structural one: the Saudi economy was expanding, Vision 2030 was driving domestic travel demand, and FlyNess had room to grow into profitability as the route network matured.

He recommended a buy. The family office followed the call, received an IPO allotment, and realized a gain of approximately 20% on listing day.