China Eastern Airlines (MU, Shanghai Hongqiao) and China Southern Airlines (CZ, Guangzhou) will apply for the voluntary delisting of their US depositary shares from the New York Stock Exchange (NYSE) and the deregistration of those shares and the underlying H shares. Both airlines expect to commence the delisting process on January 23, 2023, and to complete it by February 2.

In almost identical January 13 filings, the airlines said the decision to delist was due to several factors, including the subpar trading volume of US depositary shares relative to the worldwide trading volume of its H shares; the absence of follow-on financing of the US depositary shares since they were first listed; and the airlines' ability to raise sufficient capital from trading on the HKEX and Shanghai Stock Exchange (SSE) without the financial and administrative costs of an NYSE listing. Both airlines are controlled by the Assets Supervision and Administration Commission of the State Council (SASAC).

The delistings come despite the US and China coming to an agreement recently regarding access to appropriately audited financial records of companies with listings on US stock exchanges. A number of major Chinese companies, also under SASAC control, had recently delisted in the US, ostensibly due to audit access issues.

"Whether or not the (US depositary shares) will be traded on the over-the-counter market thereafter will depend on the actions of shareholders and independent third parties, without the company’s involvement," noted the China Eastern Airlines filing. Both airlines say they will lodge notices to delist with the US Securities and Exchange Commission (SEC) on January 23, with the delisting to take effect ten days later. The last NYSE trading day is expected to be February 2.

The two airlines stand to benefit financially from China now reopening its borders and lifting most travel restrictions. In anticipation, China Southern Airlines shares have risen around 40% on the HKEX in the last three months, while China Eastern shares are up around 30%.

The China Southern Airlines filing says that it does not intend to seek a listing or registration on any US stock exchange regarding its H shares following this delisting. Both airlines say their respective H shares will continue to trade on the HKEX.