Hainan Airlines will get an RMB 3-billion ($440 million) cash injection from local government and its parent to increase capacity and reduce debts against the fallout from the economic downturn.
The country’s fourth largest carrier, backed by the US billionaire George Soros, will issue 300 million new shares each to the Hainan government and HNA Group at about RMB5 a piece and collect RMB3 billion in total.
Wu Li, an analyst with Guotai Junan Securities, said, ‘Hainan Air expanded its capacity quickly in recent years and the injection can help it introduce more jets and the lower debt-to-asset ratio will enable the carrier to widen financing channels to increase its capacity.’
The share sales will help reduce the carrier’s debt-to-asset ratio to about 81% from its current 86.93$.
Hainan Air posted a net loss of RMB1.42 billion last year, compared with an RMB627 million yuan profit in 2007, due to the economic downturn and domestic natural disasters which dampened demand.
Shanghai Daily said the carrier said it plans to introduce about 90 jets from this year to 2013, and this will require RMB24.33 billion this year in bank loans and short-term financing bonds.
Its parent HNA Group said earlier this week that it plans to increase its investment in Grand China Express and change its name to Tianjin Airlines next month to cover more routes.