Air China Plans $2.9bn Capital Raise Backed by Parent Group

Air China has announced plans to raise up to CNY 20 billion (USD 2.9 billion) through a private placement of A-shares, with the entire issuance to be subscribed by its state-owned parent group. The proposal was accepted for review by the Shanghai Stock Exchange on January 8, according to a regulatory filing.

Under the terms outlined in the prospectus, Air China’s controlling shareholder, China National Aviation Holding, together with its subsidiary China National Aviation Capital Holding, will fully underwrite the transaction. The group plans to subscribe to up to 3.04 billion newly issued shares, priced at CNY 6.57 (USD 0.90) per share.

Air China said the net proceeds from the placement will be used primarily for debt repayment and working capital, reinforcing the airline’s balance sheet as it continues to recover from prolonged financial pressure linked to the pandemic and uneven traffic recovery. Like many Chinese carriers, Air China has faced elevated leverage levels following years of weak international demand, high fuel costs, and fleet-related capital commitments.

The proposed capital injection underscores continued state support for China’s flag carrier at a time when the aviation sector remains strategically important but financially strained. By relying entirely on its parent and an affiliated investment vehicle, Air China avoids potential dilution from third-party investors while ensuring swift execution once regulatory approvals are secured.

Analysts note that the pricing of the placement reflects a balance between market conditions and the need to strengthen Air China’s finances without destabilising its share price. The transaction will increase the airline’s issued share capital, but the ownership structure will remain firmly under state control following completion.

Air China operates a large domestic and international network from its primary hub at Beijing Capital International Airport, and has been gradually rebuilding long-haul capacity as international travel restrictions ease. However, profitability has lagged peers in some segments, driven by intense domestic competition, aircraft availability constraints, and lingering cost pressures.

The carrier has previously signalled that balance-sheet repair is a priority before pursuing more aggressive growth. Proceeds from the share placement are expected to ease short-term liquidity needs, lower interest expenses, and provide flexibility to support day-to-day operations as demand patterns normalise.

The capital raise also aligns with a broader trend among Chinese airlines, many of which have turned to equity injections from state shareholders rather than market-based fundraising to stabilise finances. Regulators have generally supported such moves, viewing aviation as critical infrastructure with broader economic and geopolitical significance.

If approved and completed as planned, the transaction would rank among the largest airline capital raises in China in recent years, reinforcing Air China’s financial foundation as it navigates a challenging but gradually improving operating environment.

Related News: https://airguide.info/category/air-travel-business/airline-finance/

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com