China’s first private charter airline Juneyao Air has been cleared for a Shanghai IPO on April 22 by the China Securities Regulatory Commission. The elite corporate airline founded by Juneyao Group’s founder Juneyao Wang in 1991 will become the second A share listed carrier and a “blue-chip” company in the Shanghai stock exchange (SSE).
Juneyao Air is a typical family-run corporation. Its chairman Junjin Wang and his immediate relatives hold up to 90% of the company, according to its prospectus. Juneyao Group is the major shareholder of Juneyao Air with a stake of 81.02%. Mr. Wang holds 5.52% additional shares while
Juneyao Investment holds 3.46% and the remaining 10% is held by other investors.
According to its prospectus, Juneyao Air will issue up to 200 million shares in the SSE and transfer up to 40 million existing shares for trading. Its total equity will be up to 700 million shares after the new issue. It hopes to raise RMB1.981 billion in the IPO to finance the purchase of seven A320 aircraft and two standby engines. Guotai Junan Securities will serve as the main IPO underwriter.
Juneyao Air’s competitor Spring Airlines successfully listed as a blue-chip stock on the SSE on January 21 this year. Like Juneyao Air, Spring Airlines is also based in Shanghai but it is positioned as a low-cost carrier (LCC) while Juneyao Air targets mid to high-end corporate clients and leisure travelers.
Juneyao Air operates more than 60 air routes, including four to Hong Kong, Macau and Taiwan and nine international air routes. It recorded RMB3.191 billion operational revenue and RMB191 million profit in the first half of 2014. After deducting RMB57.1031 million in government subsidies, Juneyao Air’s profit in this period still far exceeded that of major carriers like Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines. Its high profitability makes Juneyao Air a blue chip for investors.
Meanwhile Juneyao Air has also released deep discounts on many of its flights in an effort to lift load factor. It entered the LCC market by launching 9air LCC to expand its capacity and scale. Mr. Wang previously said Juneyao Air’s had the world’s youngest fleet of some 40 planes, with an average age of no more than three years.(Translation by David)
