Air China Ltd., the country’s largest carrier by market value, plans to raise as much as 12 billion yuan ($1.9 billion) from a private placement of new shares amid volatility in the domestic stock market.
The Beijing-based airline plans to sell as many as 994 million shares for at least 12.07 yuan each, using the money to buy 15 Boeing Co. 787 planes, the carrier said in a Shanghai exchange filing Tuesday. The shares will be sold to as many as 10 investors, including the airline’s parent, China National Aviation Holding Co.
The minimum sale price is a 21 percent discount to the stock’s June 29 closing price of 15.36 yuan -- its highest level since November 2010 -- the last day before trading was suspended pending this announcement. The company has applied for shares to resume trading Wednesday in Shanghai and Hong Kong.
Air China is among at least four mainland carriers that announced plans to raise funds from private A-share placements as the world-beating rally in the onshore Chinese stock markets started unwinding. The benchmark Shanghai Composite Index has dropped more than 14 percent during Air China’s suspension.
The announcement of the sale comes a day after state-owned rival China Eastern Airlines Corp. announced plans to raise 15 billion yuan through a private placement of shares. The Shanghai-based carrier also said it raised $450 million by selling a stake to Atlanta-based Delta Air Lines Inc., expanding a partnership that will allow the two airlines to better compete on routes across the Pacific.
Spring Airlines Co. said July 20 it plans to raise as much as 4.5 billion yuan in a placement with 10 unidentified investors, and Juneyao Airlines Co. said July 14 it plans to raise as much as 3.57 billion yuan.
If Air China sells the maximum number of shares, it would equal almost 12 percent of its currently outstanding A-shares. Air China said it also will use the proceeds to upgrade its e-commerce capabilities and install inflight Wi-Fi services, among other things.
Other participants in the deal may include securities companies, trust companies and qualified foreign investors, Air China said.
In a separate statement, the airline said it expects net income to rise by as much as 743 percent to 4 billion yuan in the first six months of this year compared to a year earlier, based on Chinese accounting standards.