Air China has announced plans to raise to CNY20 billion yuan (USD2.9 billion) through a private placement of A-shares, as the carrier looks to strengthen its financial position.
The application for the share placement was accepted for review by the Shanghai Stock Exchange on January 8.
According to the prospectus, the private placement will involve the issuance of up to 3.04 billion A-shares, priced at CNY6.57 (USD0.9) per share. The entire offering will be subscribed to by Air China’s controlling shareholder, China National Aviation Holding, along with its subsidiary, China National Aviation Capital Holding. This means there will be no external investors involved in the transaction, underlining strong internal backing for the airline.
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Funds allocated for debt repayment
The funds raised through this issuance are intended to be used primarily for debt repayment and working capital requirements. By allocating a significant portion of the proceeds to reducing debt, Air China aims to ease financial pressure and improve its balance sheet. The remaining funds will support day-to-day operations, which is especially important as airlines continue to navigate high operating costs and fluctuating demand.
The move comes at a time when Chinese carriers are focusing on financial stability and long-term sustainability. Strengthening liquidity through equity financing can help airlines manage cash flow, invest in operations, and maintain service levels without increasing borrowing.
