Air China likely to cut domestic share offering
By Lu Haoting (China Daily)
Updated: 2006-08-08 09:02 Chinese airlines suffered an aggregate 2.57 billion yuan (US$321 million)
loss in the first half of the year, more than quadruple that in the same period
of last year. Record high fuel prices triggered a 21 per cent year-on-year rise
in their costs. Jet fuel accounted for 39 per cent of Air China's 2005 operating
costs, compared with 33.4 per cent in 2004, the airline said in its A-share
prospectus.
Investor interest in Air China was diluted by the flood of companies planning
to list in Shanghai.
"Investors will look around and make a careful comparison of all these
companies. The capital in their hands is limited, and they have so many
choices," said Guo Dongmou, an aviation analyst at Shenzhen-based China
Merchants Securities.
The China Securities Regulatory Commission lifted its year-long ban on
domestic IPOs in May. Gains on new shares have been falling as more companies
sell shares.
Shares in China CAMC Engineering Co, the first company to go public after the
ban was lifted, jumped more than fourfold on its first day of trading in June.
Bank of China Ltd achieved a gain of 31 per cent on the day of its IPO in July.
However, the premium from the trading debut of Daqin Railway Co narrowed to 12
per cent when the company was listed last Tuesday.
Some analysts have suggested that the best way for Air China is to postpone
its domestic listing or lower its price.
Air China's H shares yesterday dropped 3.38 per cent to close at HK$2.86.
The carrier planned to raise 8 billion yuan (US$1 billion) from its domestic
listing to finance the purchase of 45 aircraft and its airport expansion project
in Beijing.
(For more biz stories, please visit Industry Updates)
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