On the evening of May 10, China Eastern Airlines (600115. SH) announced the plan for non-public offering of a shares in 2022. The total amount of funds to be raised by non-public offering shall not exceed 15 billion yuan (including this amount). The net amount of funds raised after deducting the issuance expenses will be used to introduce 38 aircraft projects and supplement working capital.
Among them, China Eastern Airlines Group plans to subscribe for the non-public offering in cash with an amount of no less than 5 billion yuan. In addition, the non-public offering of a shares is aimed at no more than 35 (including 35) specific investors, including China Eastern Airlines Group.
China Eastern Airlines said that since 2020, affected by the epidemic, the market demand of the civil aviation industry has been greatly impacted. The controlling shareholder's capital injection and the introduction of investors are aimed at providing a solid guarantee for the company's business development and enhancing market confidence. The introduction of investors is conducive to optimizing the company's ownership structure, further improving the governance mechanism, giving full play to industrial coordination and resource integration, and promoting the long-term development of the company's business.
"Under the background that the recovery of China's civil aviation industry is gradually accelerating and the demand for air travel still has great potential, the company has the objective demand and realistic conditions for the introduction of aircraft." Referring to the purpose of the raised funds, China Eastern Airlines said in the announcement that the company has ushered in important development opportunities thanks to the national implementation of the "Yangtze River Delta integration" strategy, Shanghai's promotion of the construction of five international centers of "economy, finance, shipping, trade and science and innovation" and the overall plan for the construction of Hongqiao International Open hub. By introducing aircraft, reasonably expanding the fleet size and optimizing the fleet structure, the non-public offering will further improve the company's aviation carrying capacity, which is in line with the development direction of building a streamlined and efficient modern fleet, so as to consolidate the company's comprehensive competitive strength and provide a solid guarantee for the sustainable and stable development of business. Among them, the aircraft models to be introduced in this non-public offering include domestic C919 aircraft and ARJ21-700 aircraft, which is conducive to the company's continued firm support for the national strategy of domestic large aircraft and the development of domestic large aircraft industry clusters.
The air transport industry is a capital intensive industry. In addition to part of the capital expenditure such as aircraft purchase comes from its own funds, it mainly comes from bank loans and financial leasing, resulting in a generally high asset liability ratio of aviation enterprises. As of the end of 2019, 2020, 2021 and March 31, 2022, the asset liability ratio (consolidated standard) of China Eastern Airlines was 75.12%, 79.85%, 80.84% and 83.56% respectively, showing a continuous upward trend. China Eastern Airlines said in the announcement that the fund-raising will also help to further improve China Eastern Airlines' capital structure, anti risk ability and financial stability. The company admitted that the high asset liability ratio affected by the epidemic may cause the company to face certain debt repayment pressure. Therefore, through the financing of this non-public offering of a shares, it plans to use the raised funds of 4.5 billion yuan to supplement working capital.