China Southern Air to raise up to $1.9 billion in share issue for aircraft purchase, capital boost

FILE PHOTO: A China Southern Airlines aircraft flies over a slum before landing at Manila's International airport May 16, 2012. REUTERS/Romeo Ranoco/File Photo

HONG KONG (Reuters) - China Southern Airlines 600029.SS1055.HK said on Monday it will raise up to 12.7 billion yuan ($1.9 billion) in a private sale of new shares to fund the purchase of aeroplanes and replenish working capital.

China’s largest airline by passenger numbers said 7.8 billion yuan of the proceeds will be used to acquire 41 aircraft, and the selection and installation of lightweight seats for its A320 series aircraft.

The rest of the proceeds will be used to supplement working capital, it said in a filing to the Hong Kong stock exchange.

Chinese airlines have been aggressively expanding their fleet and route network to take advantage of strong travel demand from China, the world’s fastest growing aviation market.

China Southern Airlines announced a codeshare partnership with Etihad Airways on June 22.

In March, it agreed to sell a small stake to American Airlines Group Inc AAL.O in a $200 million deal that will give the carriers better access to the world's two largest travel markets.

Reporting by Meg Shen; Editing by Keith Weir