China’s Xiamen Airlines set for $610mn recapitalisation

Xiamen Airlines (MF, Xiamen) is set to be recapitalised after its three shareholders agreed to inject CNY4 billion yuan (USD610.7 million). A stock market filing said China Southern Airlines, Xiamen C&D Corp., and the Fujian Province Investment and Development Group Co. would contribute CNY2.2 billion (USD335.9 million), CNY1.36 billion (USD207.6 million), and CNY440 million (USD67.2 million) respectively. Despite the injection, their shareholdings in Xiamen Airlines will remain unchanged at approximately 55%, 34%, and 11% each. Both Xiamen C&D and Fujian Investment are controlled by the State-owned Assets Supervision and Administration Commission of China; in the former’s case by the Xiamen People’s Government SASAC and in the latter’s by the Fujian People’s Government SASAC. In terms of disbursement, China Southern, Xiamen C&D, and Fujian Investment will pay CNY990 million (USD151.1 million), CNY612 million (USD93.4 million), and CNY198 million (USD30.2 million) as their first instalments respectively. After that, the three shareholders will settle the remainder through a payment schedule which has yet to be determined. However, while the schedule has yet to be agreed to, it does have a deadline of June 30, 2023. China Southern said its contribution would consist of aircraft assets and cash while Xiamen C&D and Fujian Investment will pay in cash. “The Capital Contribution aims to supplement the funds required for Xiamen Airlines’ operations and support the development of Xiamen Airlines’ principal business of air transportation,” the motivation said. Figures posted in the filing show that for the 11-months through November 2020, Xiamen Airlines has made a CNY572 million (USD87.33 million) net loss on revenue of CNY18.695 billion (USD2.854 billion). By comparison, for the year ended December 31, 2019, the carrier made a net profit of CNY785 million (USD119.9 million) on revenue of CNY32.612 billion (USD4.98 billion). In June, Xiamen Airlines secured CNY20 billion (USD2.83 billion) worth of credit lines from the Xiamen branch of the CCB China Construction Bank.