China Southern Airlines plans to raise up to CNY15 billion ($2.2 billion) through a private placement of A shares, with the Shanghai Stock Exchange accepting the application. About CNY10.5 billion of the proceeds will fund the acquisition of 46 new aircraft, while CNY4.5 billion will replenish working capital.
China Southern Airlines plans to raise as much as CNY15 billion ($2.2 billion) through a private placement of A shares, with the bulk of proceeds earmarked for acquiring 46 new aircraft.
The Shanghai Stock Exchange has accepted the application for the issuance to specific investors, the Guangzhou-based carrier said in a filing Tuesday. About CNY10.5 billion of the proceeds will go toward aircraft acquisitions, with the remaining CNY4.5 billion used to replenish working capital.
The capital raise comes as Chinese carriers expand fleets to capture rebounding travel demand after the pandemic-era downturn. China Southern, the country's largest airline by fleet size, joins peers in ordering new narrowbody and widebody jets from Airbus SE and Boeing Co. to modernize its fleet and add capacity on domestic and international routes.
The share sale will dilute existing shareholders, with the exact number of new shares and pricing to be determined. China Southern's H shares fell 1.2% to close at HK$3.39 in Hong Kong trading Tuesday, while its Shanghai-listed A shares declined 1%. The company's short-selling ratio on the Hong Kong exchange reached 17.8% of turnover, indicating elevated bearish positioning against the stock.
The private placement strengthens China Southern's balance sheet at a time when the airline industry faces elevated fuel costs and intense competition from rivals such as China Eastern Airlines Corp. and Air China Ltd. Investors will watch for pricing details and shareholder approval timelines as the issuance progresses through regulatory review.
This article is for informational purposes only and does not constitute investment advice.
