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Air China's profit growth to slow
(Xinhua)
Updated: 2004-11-17 09:54 Mainland's flag carrier Air
China will begin marketing shares this week ahead of an initial public offering
of stock valued at as much as US$1 billion, the Wall Street Journal reported.
The paper, citing a source familiar with the transaction, said Air China
aimed to sell a 30-percent-stake in an offering planned for mid-December.
The company would become the last of China’s three major airlines to sell
shares amid increasing competition in one of the world’s most promising aviation
markets.
The paper said Air China was expected to list its shares on exchanges in Hong
Kong and London and to raise between US$750 million and 1 billion.
It plans to use money from the sale to expand its fleet and repay debt. Air
China has 136 aircraft serving 34 international and 69 domestic destinations.
However Air China will see its earnings growth slow to about 2 percent for
the next two years after jumping 13 times in 2004, according to a research
report by one of its sponsors.
The jump in this year’s profits, which the report forecast would reach 2.29
billion yuan (US$276.6 million), comes after the SARS outbreak battered earnings
in 2003.
“We expect growth to slow in 2005, with yields coming under modest pressure
as we expect industry-wide capacity growth to pick up slightly,” IPO sponsor
Merrill Lynch wrote.
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