Air China plans to raise 6.5 billion yuan (US$952 million) via private placement to replenish working capital and buy new planes to meet the booming demand.
The Beijing-based carrier will issue as much as 585 million yuan-denominated shares at 9.58 yuan apiece to 10 institutions, including its parent China National Aviation Holding Co, it said in a statement to the Shanghai Stock Exchange late today.
The carrier will also sell as much as 157 million Hong Kong-listed shares at HK$6.62 apiece to China National Aviation Corp (Group) Ltd, a wholly-owned subsidiary of China National Aviation Holding Co, the statement said.
Air China's parent will commit at least 1.5 billion yuan cash for not more than 157 million new A shares, according to the statement.
All proceeds will replenish the company's working capital expenditure, among which 1.5 billion yuan was earmarked to acquire minor shares in Air China Cargo Co Ltd.
The carrier also plans to introduce 26 planes this year and 33 planes next year as its current capacity can't meet the fast-growing demand.
"The cash injection beats our expectation, which will reduce Air China's debt ratio by 4.6 percentage points to 71.8 percent," said Tao Wei, an analyst at China International Capital Co Ltd.
"As China's flagship international carrier, Air China will benefit the most from recovering international routes this year among all domestic airlines, and it is more flexible to compete with high-speed railways," Tao said.
Air China returned to black in the first three quarters of last year to earn 3.81 billion yuan in profit, compared to a loss of around 9 billion yuan in 2008.
The carrier's shares lost 4.12 percent to 11.16 yuan apiece today in Shanghai, while the Shanghai Composite Index declined 1.24 percent to 3,013 points.
