DALLAS — Guangzhou-based China Southern Airlines (CZ), the largest domestic operator in China, plans to raise funds for new aircraft and working capital through two share issuances. The airline has not disclosed the identities of the additional investors involved in the share issuance.
CZ intends to issue new shares to a select group of investors, including its parent company China Southern Airlines Holdings, with a total value of approximately CNY17.5bn (US$2.46bn). Further, CZ will allocate the funds raised to purchase new aircraft and support its working capital needs.
In a separate move, China Southern will issue shares worth approximately HK$2.9bn (US$370m) to its wholly-owned investment subsidiary, Nan Lung.
Explaining its decision for the fundraising exercise, CZ said that the additional capital raised would enable the company to expand its fleet, improve the age distribution of its aircraft and enhance its aviation capacity. This will then serve as a foundation for increasing the frequency and density of existing flight routes and opening new ones.
The airline states that the fresh capital will also help relieve the pressure arising from the daily operational capital requirements of the company. In the quarter ending on March 31, CZ, along with its state-owned counterparts Air China (CA) and China Eastern (MU), experienced financial losses. However, as domestic restrictions eased significantly, they reduced these losses to CNY1.5bn (US$210.9m), compared to the previous year’s loss of CNY5.9bn (US$829.8m).
Feature Image: Boeing 787-9 China Southern B-20C6. Photo: David Calabresi/Airways.