Air China plans new share issue worth $952m

Air China (0753.HK, 601111.SH, AIRC.LSE) plans to raise about US$952 million through a new share issue in order to pay down debt, Reuters reported. The announcement comes just three days after China Southern Airlines (1055.HK, 600029.SH, ZNH.NYSE) said it would issue US$1.6 billion in new shares to repay debt. In both cases, the new shares will be sold privately to a small group of investors, including the airlines’ state-owned parents. Air China’s parent will subscribe to 157 million of the 585 million new A-shares to be sold, paying at least US$219.7 million. A wholly owned unit of the parent will also subscribe to the all of the 157 million new H-shares to be issued, paying no less than HK$6.62 (U$0.85) each. The decision to tap the capital markets is a product of renewed investor interest following a recovery in domestic and regional traffic. Shares in Air China have risen 11.5% in Hong Kong so far this year, while China Southern has gained 42%, helped by the airline’s capital replenishment plan.

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