Top Biz News

Air China plans mainland listing

By Lu Haoting (China Daily)
Updated: 2006-08-01 10:58

Sinotrans Air Transportation Development Co, PICC Property & Casualty Co, China Shipbuilding Industry Corp and four other Chinese companies will buy a total of 350 million shares in Air China's domestic initial share sale. The investors will have to hold their Air China shares for at least 18 months.

Sinotrans Air will buy 80 million shares, the largest amount among the seven institutional investors. It is the first time the airfreight agent will have bought into a Chinese airline. The Shanghai-listed company is a unit of China National Foreign Trade Transportation (Group) Corp (SINOTRANS), one of China's largest logistics companies.

"We hope the purchase of Air China's A shares will enhance our co-operation with the airline in the future," said Pan Baoliang of the securities department of Sinotrans Air.

Pan said his company is expected to spend more than 200 million yuan (US$25 million) buying the shares.

Analysts said the airfreight agent might hope to boost its own international airfreight business by partnering with Air China, which has the most extensive international flight network of China's airlines.

"Sinotrans Air will only buy 80 million shares, which account for less 3 per cent of the total shares issued by Air China. I don't think it hopes to reap substantial profit from Air China's shares," said Li Lei, an aviation analyst with CITIC Securities, a Beijing-based securities firm.

"But by using this opportunity, Sinotrans Air might want to start more business co-operation with Air China in the future," Li said.

Sinotrans Air last year reached an agreement with Sichuan Airlines to buy 49 per cent of the Chengdu-based carrier. But the plan was shelved after SINOTRANS' new Chairman Miao Gengshu took office at the end of last year.