A Juneyao Airlines plane taking off at Shenyang Taoxian International Airport Photo: CFP
Amid signs from the regulators that IPO approvals are set to restart, more airlines are planning to get listed, with two privately owned carriers aiming to join the four State-owned aviation companies that have gone public so far in China.
Two Shanghai-based airlines, Spring Airlines Co and Juneyao Airlines Co, filed IPO applications with the China Securities Regulatory Commission (CSRC) just before China's Labor Day holidays.
According to the prospectus released by the CSRC, Spring Airlines, China's first and biggest budget carrier, has applied for a $400 million IPO in Shanghai to fund expansion of its fleet.
The company plans to raise 2.53 billion yuan ($406 million) to help buy nine Airbus A320s, which would cost about 1.33 billion yuan in total at list prices. It also wants to buy three A320 flight simulators, at a price of 300 million yuan in total.
"It is the right time for the company to get listed," Zhang Wu'an, a spokesman for Spring Airlines, told the Global Times Wednesday.
According to Zhang, the government has recently issued more policies to support budget airlines, and the campaign to crack down on corruption and excessive government spending also makes room for the development of budget carriers.
Spring Airlines has been planning to get listed for some time. It first started drawing up plans to float in 2006, but it shelved the idea due to the financial crisis in 2008. There were further efforts to restart the IPO process in 2009 and 2011, but these were also canceled as the A-share market was performing poorly.
Juneyao Airlines plans to issue up to 200 million shares, and it aims to raise 1.9 billion yuan in an IPO in Shanghai to fund its fleet expansion.
The two companies' recent performance has been impressive.
According to figures from Spring Airlines, the company made a net profit of 21 million yuan in 2008, at a time when most of its rival firms were making a loss. And from 2011 to 2013, its annual revenue has climbed from 4.46 billion yuan to 6.56 billion yuan.
Juneyao Airlines, founded in 2006, has been profitable for the past three years. In 2013, it made revenue of 5.93 billion yuan, up 33.29 percent from the previous year, and its net profit reached 337 million yuan, up 34.8 percent year-on-year.
However, some have expressed concern about potential problems for the two companies.
Spring Airlines has benefitted significantly from government subsidies, with the subsidies accounting for 74.5 percent, 59.89 percent and 52.9 percent of its reported net profits in 2011, 2012 and 2013, respectively.
However, Zhang Wu'an from Spring Airlines said that the net profit margin of the company without the subsidies still reached 13 percent last year, higher than the average level.
In its prospectus, Juneyao Airlines warned about the risk of fluctuating fuel prices, which have accounted for 47.5 percent, 51.1 percent and 49.8 percent of its costs in 2011, 2012 and 2013, respectively.
The depreciating yuan is another challenge for the carrier, as it has 502 million yuan of dollar-denominated debts, it said.
Su Baoliang, an analyst at CITIC Securities, told the Global Times Wednesday that going public could help the two airlines expand their fleet size, as well as improving their brand image. However, he warned that the development of high-speed railways could pose another challenge to the further development of the airlines.
Airlines unveil new routes, services
Air China
Air China launched a new route to Barcelona from Beijing via Vienna Monday, marking an increase in the number of flights offered by the Chinese flag carrier heading to Europe. The airline will offer four flights on the route per week, which will fall on Mondays, Thursdays, Fridays, and Saturdays.
Airbus
Royal Brunei Airlines has signed a contract with Airbus for a firm order of seven A320neo aircraft plus three options, as part of the latest phase of its fleet modernization program. The aircraft will be operated on the airline's regional network linking Bandar Seri Begawan with destinations across Asia. The aircraft will be powered by Pratt & Whitney PW1100G-JM engines.
British Airways
British Airways said Tuesday that it had started using a Boeing 787 Dreamliner on its direct service between Chengdu? and London, while also increasing the frequency of flights on the route from three to five per week.
It is the first time a 787 Dreamliner has been used for international direct flights connecting with Chengdu Shuangl?iu International Airport, one of China's fastest growing hub airports.
Emirates
Emirates will increase the frequency of its nonstop service from Shanghai to Dubai, and will operate daily flights on the route from Monday, using an Airbus A380
The daily service will continue to operate as flight EK302, departing Dubai at 03:25 local time and arriving at Shanghai Pudong International Airport at 15:05 local time.
The return flight EK303 departs Shanghai at 23:00 and arrives in Dubai at 05:05 the following day.
Etihad Airways
Etihad Airways, the national airline of the United Arab Emirates, has unveiled new services on its Airbus A380 and Boeing B787 Dreamliner aircraft, including "The Residence," which is designed to offer the world's most luxurious flight, and is available only on the airline's A380 aircraft.
The Residence will offer single or double occupancy, featuring a living room, separate double bedroom and shower. Guests in The Residence will also have a personal butler.
Singapore Airlines
Singapore Airlines (SIA) and the Singapore Tourism Board (STB) have embarked on a strategic partnership aiming to attract more visitors from key source markets to Singapore.
The partnership, which runs until June 30, 2015, entails a global marketing collaboration between SIA and the STB that will target a broad spectrum of leisure and business visitors. It will see the two partners investing a total of S$4 million ($3.20 million) in joint campaigns across the globe, with a focus on Australia, China, Germany, India, Japan, the UK and the US.
