Air China has begun the first steps towards a public flotation in 1998, becoming the last of the mainland China's big three carriers to go for a listing following successful launches by China Southern and China Eastern in New York and Hong Kong.

According to China's state-run media, the flag carrier's president Yin Wenlong says that a stock market capitalisation is needed for the carrier to develop and compete domestically and internationally. Air China has established a special team to prepare for the listing.

Up to 35% of the carrier is expected to be offered on the Hong Kong and New York bourses, the maximum foreign share allowed now under Chinese law. Analysts estimate the airline will require at least another six to nine months to prepare itself for the float.

Air China needs to be financially and legally restructured to conform with stock-exchange requirements. The group's assets have to be re-organised, including possibly establishing a separate business structure for aircraft used exclusively for Government VIP flights. The carrier has taken delivery of the first of three Airbus A340-300s to be used primarily on routes between Beijing and Europe.

New York stock exchange regulations require the airline to issue a financial report not more than six months before a listing. The airline reportedly has assets worth ´19.3 billion ($2.3 billion), with profits for 1996 being put at around ´470 million on sales of revenue of ´11.5 billion. "They may be able to build on the experience already gained by China Southern and China Eastern and complete their preparations faster. It all comes down to how complex the group's assets are," suggests a Hong Kong-based financial analyst.

China National Aviation (CNAC), which was given approval for a share listing earlier this month (Flight International, 15-21 October), has begun an international tour of possible investors ahead of its planned Hong Kong listing. It hopes to raise up to HK$1.5 billion ($195 million), but analysts have responded cautiously to the projected offer price.

Aviation stock in the Hong Kong exchange is now performing sluggishly because of the massive drop-off in air traffic, with Cathay Pacific and China Southern among the fallers.

Source: Flight International