The Board of Directors of China Eastern Airlines has approved the non-public issuance of shares to raise RMB 15 billion, of which two-thirds will be used to finance the purchase of 38 new aircraft. The issuance of no more than 5.6 million shares was approved on May 10, the airline said in a stock exchange filing. China Eastern issues new shares for fleet purchases.
China Eastern offers the shares to no more than 35 specific investors. This includes its own parent company CEA Holding, which currently holds 56.43 percent and intends to subscribe to the A-shares. CEA is owned by SASAC. This State-owned Assets Supervision and Administration Commission of the State Council owns 68.42 percent of CEA Holding, with the remainder owned by other investors and insurance groups.
Other subscribers shall be legal persons, natural persons, or investment organizations. Their participation is conditional on the approval of the general meeting of China Eastern. There will be an eighteen-month lock-up for shares purchased by CEA Holding.
China Eastern Airlines’ fleet plan for 2022-2024. Not included is the Group’s backlog for 28 Boeing MAX 8s. (China Eastern)
While RMB 4.5 billion of the proceeds will be used as supplemental working capital, the rest is for financing China Eastern’s fleet purchases for the short and medium term. The filing at the Hong Kong and Shanghai Stock Exchange doesn’t specify for which aircraft China Eastern will use the proceeds.
In its fleet plan for 2022 through 2024 which was released at the end of March, China Eastern Group (including Shanghai Airlines and OTT Airlines) intends to introduce 35 Airbus A320neo’s, nine A350-900s, nine Boeing 787-9s, 28 COMAC ARJ21s, and five C919s. Deliveries of the first C919s were expected at the end of 2021 but have slipped until further notice as the type still needs type certification. The plan excludes the Boeing MAX, of which the Group has 28 in backlog, as China Eastern waits for the CAAC to recertify the type.
Last November, China Eastern also issued new shares and raised RMB 10.8 billion, of which RMB 6 billion was used to repay debts and RMB 4.82 billion as new working capital. The airline ended 2021 with an RMB 13.3 billion net loss.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.