(Yicai Global) Aug. 3 -- Air China, China’s flagship airline, is aiming to secure as much as CNY15 billion (USD2.2 billion) through a private placement of new shares to pay for part of its record-breaking new plane order with European aircraft maker Airbus.

Air China will issue new shares amounting to no more than 30 percent of its total share capital to as many as 35 investors, the Beijing-based firm said yesterday. Majority stakeholder China National Aviation Holding will subscribe to at least CNY5.5 billion (USD814.8 million) of the shares. The offer price was not mentioned.

CNY10.8 billion of the money raised will be used to pay for 22 new planes, including nine A350 and four A320 NEO aircrafts made by Leiden, the Netherlands-based Airbus and nine ARJ21 jets from the Commercial Aircraft Corporation of China. They should be delivered this year and next. The remainder of the funds will go toward supplementing working capital, it said.

The order is part of a much bigger purchase contract for 292 Airbus-made A320 Neo jets placed by the country’s three largest carriers, Air China, China Eastern Airlines and China Southern Airlines, last month. Worth USD37.3 billion, it is the biggest airplane order ever for the three. Air China will buy 96 of these for USD12.2 billion. The planes will be delivered between next year and 2027.

Air China plans to have a bigger fleet in three to five years’ time, as old planes go out of service, and also to meet the expected growing demand in air travel once the Covid-19 pandemic ends, it said. The carrier has not bought many new planes in recent years and its 746 aircraft are now an average of more than eight years old.

The Covid-19 pandemic has hammered the civil aviation industry as air travel ground to a halt. Air China is bracing for losses of up to CNY21 billion (USD3.1 billion) in the first half, a widening of 26.5 percent from the total losses of last year and of 45 percent from 2020.

The Civil Aviation Administration of China will inject CNY11 billion (USD1.6 billion) into the top three carriers as well as airport operator Capital Airports Holding and secure CNY150 billion in emergency loans to keep the industry running as normal, it said last month.

Air China’s stock price [SHA:601111] closed down 0.41 percent at CNY9.63 (USD1.44) today, giving it a market capitalization of around CNY140 billion (USD20.7 billion).

Editor: Kim Taylor