Paul Lewis/SINGAPORE
CHINA EASTERN Airlines has been given the go-ahead to have its shares listed on the New York and Hong Kong stock exchanges by the end of the year, says a senior Civil Aviation Administration of China (CAAC) official.
The Shanghai-based carrier, together with Air China and China Southern Airlines, has been waiting more than two years to go ahead with a public share listing. China Southern also will be allowed to go public early in 1997, says CAAC vice-minister Shen Yuankang.
Hainan Airlines has also filed an application for a listing on the Shanghai exchange. In late 1995, the carrier became the first of China's airlines to accept a foreign investment, when US financier George Soros took a 25% stake.
China had held off from floating the airlines for several reasons, including the state of the Hong Kong and New York stock exchanges and the need to bring Chinese accounting procedures into line with international standards.
Shen does not give any details on the size of the offer or proposed share price, beyond that it will be limited to 35% of the state-run airline's assets. China Eastern and China Southern have already appointed brokers, Morgan Stanley and Goldman Sachs respectively, to manage their listing.
Most recent Chinese company floats have favoured a dual listing in Hong Kong and New York as a way of improving stock marketability, say analysts. Richard Margolis of Merrill Lynch, however, warns that "-the mixed experience investors have had with Chinese issues, will make most subscribers want to scrutinise the offer very closely".
Chinese state-run entities attempting to move to the public sector face several major hurdles. Companies are often burdened with excessive non-operational functions and have accumulated massive triangular debts from other state organisations.
Official China Eastern figures say that the company made a profit of '177.9 million ($22 million) in 1995. The airline, with its subsidiary operations in Anhui, Jiangsu, Jiangxi and Shandong provinces, operates a total of 41 aircraft.
Its fleet consists of ten Airbus Industrie A300-600s, two A340-300s, ten Fokker 100s, six McDonnell Douglas (MDC) MD-11s and 13 MD-82s. A further six A340s are on order, and the airline plans to take delivery of the first of nine MDC MD-90s in August 1997, but a final contract has not yet been signed.
Source: Flight International
