China Southern Airlines (CZ, Guangzhou) has said it intends to raise up to CNY17.5 billion yuan (USD2.46 billion) through a private placement of shares, in part to help it acquire fifty A320neo aircraft, the carrier announced in a Shanghai Stock Exchange filing on May 31.
While CNY5.25 billion (USD740 million) of the above sum will be funnelled into the state-owned airline’s supplementary working capital, CNY12.25 billion (USD1.72 billion) will be used to “introduce” the fifty new twinjets. If the actual funds raised after deducting expenses are less than the total planned investment, the company “will adjust the funds that are raised.”
On the same date, China Southern Airlines said in a separate Hong Kong exchange filing that it would seek to raise an additional HKD2.9 billion Hong Kong dollars (USD408 million) for the same purpose, making a grand total planned fundraising of USD2.87 billion. However, the proceeds from this share sale to selected investors will be added to the company’s funds for general operations, not to fund fleet acquisitions.
The A-share issuance in mainland China and the H-share issuance in Hong Kong “are not inter-conditional”, China Southern clarified.
The stock sales will help expand the size of China Southern’s fleet to meet the growing demand for air travel in the Guangdong-Hong Kong-Macao Greater Bay Area, ease liquidity pressures caused by the consequences of the pandemic, and “enhance the company’s anti-risk ability and competitiveness”, the carrier said.
The Greater Bay Area is at the forefront of the opening up of coastal China, the airline’s Shanghai disclosure said, calling the Pan-Pearl River Delta region, which consists of nine provinces, “its vast development hinterland”. The plan is to also enhance the competitiveness of Guangzhou and Shenzhen airports as international hubs. Increasing the fleet size will boost its ability to take advantage of this, the airline said.
China Southern majority shareholder China Southern Air Holding will be the lead investor in the private placement of shares on the Shanghai Stock Exchange, while Hong Kong-registered subsidiary Nan Lung Holding will subscribe to all of the newly-issued shares on the Hong Kong bourse. The overall holding company directly owns a 51.9% stake in China Southern Airlines, and Nan Lung directly and indirectly holds a 14.6% stake, but the filings did not say exactly how these shareholdings would change after the stock sales.
According to the ch-aviation fleets module, China Southern Airlines already operates among its narrowbody fleet thirty-nine A320-200Ns (with twenty-seven more to be delivered), four A319-100neo (with five more to be delivered), twenty-eight A321-200Ns (with sixty-four more to be delivered), and another twenty-eight A321-200NXs.
