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BUSINESS & TECH

Quick Take: China Eastern to Raise $2.2 Billion for New Planes

Photo: VCG
Photo: VCG

The state-owned China Eastern Airlines Corp. Ltd. plans to raise as much as $2.2 billion through a share sale to expand its aircraft fleet in the face of growing demand.

China Eastern will issue up to 1.6 billion shares in Shanghai and 517 million shares in Hong Kong to raise up to $2.2 billion in total, according to a company filing (link in Chinese) to the Shanghai Stock Exchange.

Those lining up to purchase shares include state-backed China Structural Reform Fund Corp. Ltd., the Juneyao Group, and its subsidiary Juneyao Airlines Co. Ltd. After the sale, the Juneyao Group and its air unit will own 5% of the airline’s shares.

The $1.78 billion the company plans to raise in Shanghai will be used to purchase 18 airplanes, 15 flight simulators and 20 backup engines, the filing said.

The addition of 18 new aircraft will bring the Shanghai-based carrier’s fleet to a total of 655.

The move comes as the Chinese air market is booming as the growing middle class increasingly chooses to fly. In 2017, Chinese citizens took a total of 552 million flights at home and aboard, a 13% year-on-year increase, according to the Civil Aviation Administration of China.

China is set to overtake the U.S. as the world’s biggest air market by 2022, according to the International Air Transport Association.

China Eastern’s move to introduce more investors is also a response to Beijing’s call for ownership structure reform in the industry through the greater infusion of private capital.

Contact reporter Mo Yelin (yelinmo@caixin.com)

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