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Air China said in Beijing on Tuesday it will now offer only 1.639 billion shares, down 41 percent on the 2.7 billion shares originally announced, in its initial public offering on the Shanghai stock exchange.
Air China, the country's largest air carrier, said the price of its A-shares has been fixed at 2.80 yuan (US$0.35) per share. Previously, the company had indicated a price range of between 2.75 yuan and 2.95 yuan a share.
Company secretary Zheng Baoan told Shanghai Securities News that weak market conditions had prompted the company to reduce the number of shares offered to investors. The move reflected the company's responsible attitude to both investors and markets, he said.
China's stock markets slumped Monday for the ninth session in a row. Market analysts blame the situation on frequent refinancing and IPOs.
Zheng claimed that the reduced share offering will have no impact on Air China's fundraising projects and future prospects as the company has a variety of financing channels.
A fund manager who preferred to remain anonymous said Air China's profitability has been undercut by soaring oil prices. Since oil prices are unlikely to go down in the next three years, an investment in Air China may be risky.
According to Air China's prospectus, fuel expenses accounted for 33.4 percent of its total operating costs in 2005. Its fuel costs rose to 5480 yuan per tonne in the first half of this year, up 13.3 percent year on year.
(Xinhua News Agency August 8, 2006)
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