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China's flag carrier, Air China, is considering an overseas stock offer that could be launched in the first half of next year, company officials and underwriting sources said.
Air China was considering listings in Hong Kong and New York which together could be valued at around US$500 million, they said.
Leading investment banks were in Beijing this week pitching to underwrite the deal, which could float up to 35 percent of the company, underwriters said.
The planned listings by Air China follow the announcement last month that China would set up three major airline groups, including one built around the flag carrier.
"The whole industry restructuring picture has been laid out," said an analyst at a foreign securities firm. "The company just wants to take advantage of this to take a further step and list.
"It's in a very preliminary stage."
Analysts said an offer by Air China would benefit from China's entry into the World Trade Organization, which should boost cargo traffic, as well as from attractive pricing compared with the more expensive shares of other Asian airlines.
Air China officials confirmed plans to list overseas but declined to give details. The company had set up a committee to evaluate assets for the listing vehicle, they said.
Bear Stearns, Credit Suisse First Boston, Goldman Sachs, ING Barings, J.P. Morgan Chase & Co, Merrill Lynch and UBS Warburg were seeking roles in the deal, investment bankers said.
Air China has wanted to list for several years, but the Asian economic crisis in 1997 and, more recently, high fuel prices and the planned industry restructuring had delayed the move, analysts said.
Under the merger blueprint outlined by the regulator General Administration of Civil Aviation of China (CAAC), Beijing-based Air China will merge with profitable China Southwest Airlines and regional Zhejiang Airlines.
After the merger, Air China Group's assets would total 56.05 billion yuan (US$6.77 billion) with a fleet of 118 aircraft, 339 routes and more than 20,300 employees.
The two other groups revolve around China Southern Airlines and China Eastern Airlines - both of which are already listed overseas.
Analysts said the merger plan outlined by the industry regulator gives market leader China Southern a commanding edge in terms of fleet size and would put flag carrier Air China on an even footing with China Eastern, now the second-largest carrier.
Air China could cash in on its merger with profitable Southwest Airlines and win lucrative routes in western regions, they said.
(China Daily 05/22/2001)
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