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SHANGHAI: Shares in Air China rose Friday after the nation's flag carrier said it plans to raise more than US$950 million through a private share placement to boost capital and lower financing costs.
Air China, the country's second largest airline by fleet size, said it will raise 5.6 billion yuan (US$819.9 million) by selling up to 585 million new yuan-denominated A shares.
The A-shares will be sold to 10 institutions at a minimum of 9.58 yuan, according to a statement filed with the Shanghai Stock Exchange late Thursday.
Parent China National Aviation Holding Co will subscribe to at least 1.5 billion yuan worth of A shares, it said.
Air China will also raise up to HK$1.04 billion (US$133.9 million) by issuing 157 million H-shares to a wholly owned unit of the parent at a minimum of HK$6.62.
Shanghai-listed shares of Air China, which had been suspended since February 26 pending the announcement, were up 1.2 per cent at 11.78 yuan in the morning session from the previous close of 11.64 as trading resumed on Friday.
The company expected the placement to lower its debt-to-assets ratio to 71.8 per cent from the 76.4 per cent it was at by the end of September 2009 and save 345 million yuan of interest expense annually, according to the statement.
The placement "would increase the company's capital funds, decrease its debt ratio, improve its financial condition so as to satisfy the funding requirement of its business development", it said.
Air China said it planned to introduce 26 new planes in 2010 and 33 more in 2011.
The nation's biggest carrier, China Southern Airlines, said Tuesday it plans to raise US$1.6 billion in a private placement to repay bank loans and replenish its capital.
The government has injected nearly US$2 billion into the nation's top three carriers since late 2008 to help them weather the slowing travel demand caused by the global financial crisis.
The carriers have also benefited from a recovery in air travel traffic spurred by the country's resilience during the crisis - the world's third-largest economy expanded 8.7 per cent last year.
- AFP/sc
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