Hainan Airlines plans to make a private offering of 6.593 billion shares at a minimum of RMB3.64 per share to raise up to RMB24 billion (approx: US$3.8 billion). It will use the capital to expand its operations scale, acquire additional equity in Tianjin Airlines and repay bank loans.
Hainan Airlines will use RMB11 billion (approx: US$1.8 billion) of the raised capital as initial payment for buying 37 aircraft worth US$6.944 billion. The expanded fleet is expected to increase its annual revenue by RMB9.721 billion (approx: US$1.57 billion)
Hainan Airlines said the favorable conditions in the Chinese aviation market and macro-economic environment present it with a good opportunity to make this private offering. Scaling up the fleet and expanding its capacity is the carrier’s key strategy for the next three years.
At the same time Hainan Airlines will use RMB8 billion (approx: US$1.3 billion) of the raised funds to increase its equity stake in Tianjin Airlines to 48.21%. Tianjin Airlines was registered in 2006 in its Tiajin base and services the Bohai Sea economic region. It recorded RMB7.683 billion (approx: US$1.24 billion) in revenue and RMB253 million (approx: US$40.8 million) in profit in 2014.
In addition, Hainan Airlines will use the remaining RMB5 billion (approx: US$807 million) of the raised funds to repay bank loans which have grown along with the carrier’s expansion in recent years. (Translation by David)
