NICHOLAS IONIDES / SINGAPORE
Two of China's biggest carriers, China Eastern and China Southern, are raising billions of yuan to fund new aircraft purchases.
Shanghai-based China Eastern secured a 17.6 billion yuan ($2.1 billion) credit line late last month from the Industrial and Commercial Bank of China to help expand its operations and acquire new aircraft over the next two years.
Guangzhou-based China Southern has won approval from shareholders for a domestic share offering that will raise cash for new aircraft purchases but dilute the holdings of existing shareholders.
China Eastern is seeking government approval to order 20 Airbus A320-family aircraft for delivery from later this year, and already has five A340-600s and four Boeing 737-700s on firm order.
China Southern is also expanding its fleet, with two Boeing 747-400 freighters due for delivery this year, and 20 737-800s to follow. It is planning to sell 1 billion 'A' shares domestically, equivalent to 22.9% of its enlarged share capital, to be traded on the Shanghai stock exchange.
The carrier, which is already listed in Hong Kong and New York, says the share issue will reduce the 65.2% stake held by state-owned Southern Airlines Group to 50.3%. Another 34.8% of the carrier's shares are traded abroad, and this will be reduced to 26.8%.
China Eastern and China Southern are expanding as part of a government-ordered restructuring of the national airline industry. China Eastern, the country's third largest airline, will acquire China Northwest Airlines and Yunnan Airlines.
It has already taken over Great Wall Airlines, and recently agreed to acquire 40% of Wuhan Airlines. China Southern, the country's largest airline, will acquire China Northern Airlines and Xinjiang Airlines.
Source: Flight International
