Sichuan Airlines is set to receive a capital infusion of close to CNY4.7 billion ($659 million) from key shareholder China Southern Airlines, in a deal which also includes the transfer of a sole Airbus A330-300.
In a filling dated 29 December, Guangzhou-based China Southern says the capital injection will happen in three tranches: the first, of CNY2.3 billion in cash, by mid-January; followed by the transfer of the A330 and CNY919 million in cash before 30 June; with the remaining capital to be injected by end-March 2025.
China Southern is a key shareholder of Chengdu-based Sichuan Airlines, owning 39% of the latter carrier. Sichuan is also set to receive fresh capital from its other shareholders, which include China Eastern, and education group Chengdu Gingko.
China Southern says the capital infusion will help “supplement working capital and reduce financial security risks”, and expand Sichuan’s “scope of corporate development”.
It adds that the capital infusion is “pivotal” for its presence in the Chengdu market, as well as the construction of “strategic key markets”.
China Southern says funds for the capital infusion will not have an impact on its cash flow, and that Sichuan will remain an associate carrier following its completion.
Sichuan was loss-making in the year to 31 December 2022, reporting a net loss after tax of nearly CNY10 billion. The figure is more than double its net loss in the 2021 financial year.
According to Cirium fleets data, Sichuan is an all-Airbus operator, with 183 in-service aircraft. These comprise A320 family narrowbodies, A330s and A350s. The airline also has orders for 34 aircraft, including 20 Comac C919s.
