Xiamen Airlines looks set to become the fourth Chinese airline to go public, following the boost the domestic carrier has given to its majority shareholder China Southern Airlines in advance of its parent's late July stock market debut.

At presstime, China Southern was heading for Hong Kong and New York Stock Exchange listings after reporting a bumper 1996 fiscal year. With 35 per cent of the carrier on offer the airline began its worldwide roadshow in Hong Kong in early July boasting a 227 per cent net profit jump to US$93.2 million on a 26 per cent rise in revenues to $1.46 billion to 31 December 1996.

Analysts described the results as 'interesting' but said much of the increase came from associated companies whose results were included in the Guangzhou carrier's results for the first time.

Most significantly, say analysts, China Southern was able to consolidate the $29.4 million profit by domestic carrier Xiamen Airlines, in which it now holds a 60 per cent stake.

With impeccable timing, Xiamen Airlines has revealed it is considering a separate listing. Chairman He Ping has confirmed China Southern has no objections to such a move. 'The board of Xiamen Airlines has reached agreement to seek listing, either in Mainland (China), Hong Kong or abroad, when our development is matured and the timing right,' he says, adding that any plans depend on the success of China Southern's flotation and China Eastern's listing this year. Hainan Airlines, the only other Chinese carrier to go public, made its debut on the Shanghai exchange in June.

Xiamen has 16 B737 and B757 aircraft operating on 32 domestic routes, including Hong Kong. The airline carried some 3 million passengers last year and plans to expand its fleet to 25 by 2000.

The China Southern share issue - two-and-a-half times bigger than the float of China Eastern earlier this year - is aimed at raising $641 million, valuing the carrier at more than $1.9 billion. The issue is similar to China Eastern's listing, with 'H' shares offered in Hong Kong and American Depository Receipts (ADRs) in New York. Each ADR will be equivalent to 50 'H' shares.

In the aftermath of the return of Hong Kong to Chinese control, nearly 28 per cent of the shares have been pre-allocated to five corporations in the new Special Administrative Region. China Southern hopes their involvement will help confidence in the markets.

Tom Ballantyne

Source: Airline Business