China’s flag carrier airline Air China is seeking to raise 7.8bn yuan ($1.09bn) through a private share placement as it looks to fund new aircraft and increase working capital.
A stock market filing outlined the plan and revealed that the majority of the funding, 4.2bn yuan, would be used to purchase 17 new aircraft, with Chinese news outlets reporting that this would include six C919s and 11 ARJ21-700s aircraft from state-owned manufacturer COMAC.
According to the filing, the funds will be raised through the issuance of A Shares and H Shares, including 854,700,854 A-Class shares, traded on the Shanghai Stock Exchange (SSE), to the state-owned China National Aviation Holding (CNAH), which is already the majority shareholder of the airline.
Additionally, 392,927,308 new H-Class shares, traded on the Hong Kong Stock Exchange (HKSE), will be issued to China National Aviation Corporation, a subsidiary of CNAH, which currently has 9.61% of the airline’s issued shares.
As well as the proposed aircraft purchases, the filing also outlined uses for the rest of the funds, reading: “The company intends to further optimize its fleet structure, rationally expand the fleet size, strengthen its security assurance capabilities, enhance the competitive advantage of its principal air transport business, and accelerate the realization of the company’s strategic planning.”
While the fundraising exercise will clearly strengthen Air China’s plans for the year, it may also be seen as a further push for the COMAC’s C919, which completed its first commercial flight in May 2023 as the country’s first domestically manufactured passenger jet, flying for China Eastern Airlines.
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In addition to shares held on the SSE and HKSE, Air China is also listed on the London Stock Exchange as AIRC.