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China Southern parent wins 3b yuan capital injection

By Tong Hao (China Daily)
Updated: 2008-11-27 20:37

China Southern Airlines said today its parent company China Southern Air Holding Company has received a capital injection of 3 billion yuan to tackle its high debt ratio.

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In the statement, the company said China Southern Air Holding plans to use the new capital from the Ministry of Finance to subscribe for new shares in the airline subsidiary. The proposed share issue is subject to approval by the relevant authorities. Trading in South Airline shares has been suspended since Nov. 27.

Another state-owned airline China Eastern Airlines said in a statement that its parent company is now actively seeking new capital from the government to help reduce the assets to liabilities ratio of the company. Experts say Eastern Airlines is very likely to receive the capital soon.

China National Aviation Holding, parent company of Air China, is unlikely to get the funds because Air China debt ratio is relatively low compared to the other two airlines, reported by China Business News citing an unidentified top manager of a state-owned airline.

By the end of this September, the debt ratio of Air China is 70 percent while that of Southern Airlines and Eastern Airlines is 83 percent and 98 percent respectively.

According the third quarter report, the three state-owned airlines posted a combined loss of 5.08 billion yuan, with Southern Airlines, Eastern Airlines and Air China reporting losses of 810 million yuan, 2.33 billion yuan and 1.94 billion yuan respectively.