Time is running out for initial public offerings by two of China's leading airlines. Unless China Southern and China Eastern Airlines launch their IPOs in the US before year end they could be post- poned up to six months.

If the airlines fail to file during December, the carriers will not meet Wall Street's rules requiring access to the two most recent audited annual statements as both carriers report on a calender year basis. This could mean a delay until April, possibly as late as June, as it will take auditors that long to review the airlines' 1995 records.

China Eastern in particular could benefit from the delay. There has been some doubt about whether it could meet US requirements for two years of audited statements. It has taken China Eastern longer than its Guangzhou counterpart to spin off the airline and related divisions into a separate stock company geared for flotation. China Southern took that step over a year ago but China Eastern has reportedly completed it only this year. Until the shareholding company is segregated from other divisions, preparing separate financial statements could be an accounting nightmare.

External considerations may play a larger role now in the timing of both IPOs. China Southern postponed the launch of an offering in September. Neither IPO appears to be in jeopardy, but the mood in Beijing has definitely taken a cautious turn (see related story).

After authorising 22 firms last year to seek overseas listings, Beijing gave the green light to only seven this year. Of last year's group, 12 including China Southern and China Eastern are still awaiting final approval.

Source: Airline Business