China Southern plans to raise $2.46 billion to acquire 50 A320neo aircraft.
In a filing with the Shanghai Stock Exchange on May 31, China Southern Airlines (CZ, Guangzhou) stated that it planned to raise up to CNY17.5 billion yuan (USD2.46 billion) through a private placement of shares. With some of the funds going toward the purchase of fifty A320neo aircraft.
Of the aforementioned amount, CNY5.25 billion (USD740 million) would be used to boost the working capital of the state-owned airline, and CNY12.25 billion (USD1.72 billion) will be used to “introduce” the fifty new twinjets. The corporation “will adjust the funds that are raised” if the total anticipated investment is less than the actual money raised after expenses are taken into account.
China Southern Airlines announced in a separate filing to the Hong Kong Stock Exchange on the same day that it would aim to raise an additional HKD2.9 billion Hong Kong dollars (USD408 million) for the same reason. Bringing the total amount of planned fundraising to USD2.87 billion.
The money raised from this share sale to a select group of investors will, however, be used by the business for general operations rather than to finance fleet purchases.
China Southern stated that the H-share offering in Hong Kong and the A-share issuance in mainland China “are not inter-conditional.”
The stock sales will help China Southern increase the size of its fleet to accommodate the rising demand for air travel in the Guangdong-Hong Kong-Macao Greater Bay Area. Relieve liquidity pressures brought on by the pandemic’s effects, and “enhance the company’s anti-risk ability and competitiveness,” according to the airline.
According to the airline’s Shanghai declaration, the Pan-Pearl River Delta region, which is made up of nine provinces, is the “vast development hinterland” of the Greater Bay Area, which is leading the opening up of coastal China. The goal is to make Guangzhou and Shenzhen’s airports more competitive as global hubs.
According to the airline, expanding the fleet will improve its capacity to benefit from this.
China Southern Air Holding, the biggest shareholder of the company, will be the primary investor in the private placement of shares on the Shanghai Stock Exchange, and Nan Lung Holding, a subsidiary registered in Hong Kong, will subscribe for all of the newly issued shares on the Hong Kong exchange.
China Southern Airlines is directly owned by the overall holding company (51.9%) and Nan Lung (directly and indirectly) (14.6%), though the documents did not specify how these shareholdings would change following the stock transactions.
The ch-aviation fleets advanced module states that China Southern Airlines currently operates 39 A320-200Ns (with 27 more to be delivered), 4 A319-100neos (with 5 more to be delivered), 28 A321-200Ns (with 64 more to be delivered), and an additional 28 A321-200NXs as part of its narrowbody fleet.
