(Bloomberg) -- China Eastern Airlines Corp., one of the nation's top three carriers, is raising as much as $2.2 billion from a sale of shares to help fund purchases of aircraft and engines as the company expands its fleet to meet surging demand for air travel.
The state-owned airline proposes to sell as many as 1.62 billion shares on the mainland to investors including the Juneyao Group, collecting 11.8 billion yuan ($1.8 billion) and a further placement of up to HK$3.55 billion ($452 million) of stock in Hong Kong, according to a filing to the Shanghai stock exchange Tuesday.
Chinese carriers have been adding new routes and destinations to serve an aviation market the International Air Transport Association estimates will surpass the U.S. as the world's biggest by as early as 2022. They had a combined fleet of about 3,200 planes at the end of 2017, compared with a little less than 2,000 five years earlier, according to data from the Civil Aviation Administration of China.
Proceeds from the sale will be used to finance the purchase of 18 planes worth $1.5 billion, including narrow-body jet such as Boeing Co.'s 737s and Airbus SE's A320s and wide-body jets such as the 787 Dreamliners and A350s, according to the filing.
The Shanghai-based airline, in which Delta Air Lines Inc. has a small stake, last year announced buying a 10 percent stake in Air France-KLM Group, as part of a strategy to build a network of partners to widen its global reach.
Shares of the company have tumbled 26 percent in Hong Kong since June 13, a drop fueled by concerns a weakening yuan and rise in fuel costs will result in a dip in earnings.
To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net
To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Sam Nagarajan
©2018 Bloomberg L.P.
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