Hong Kong Airlines looks to IPO as others watch the markets for the best rates

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By admin July 7, 2014 17:04

Hong Kong Airlines looks to IPO as others watch the markets for the best rates

So will debt market rates fall below those of bank credits? UTair, for one, says that if they do then they will issue RUB3bn (US$87.2m) of bonds. This is just one airline of many watching to see where the market takes them.

Meanwhile Hong Kong Airlines is watching the markets to see if the going will be fair for its plans to launch a dual-currency initial public offering, with a US$500 million Yuan-Hong Kong dollar float during 4Q 2014. The airline, wisely, has not yet filed a listing application and has not yet decided on the final structure of if it should trade in both HKD and CNY – The airline is keeping its options open in what is a volatile market. It is confirmed that proceeds from any IPO would be used to finance aircraft deliveries.

Hong Kong Airlines is owned by HNA Group and they would have seen the dual-currency Hui Xian Real Estate Investment Trust IPO back in 2011 that raised US$1.6 billion as maybe something to follow in this case, no doubt with some influence from the Hong Kong Exchange which has been trying to encourage dual-currency listings for some time now; but in 2011 the Yuan was still rising, and here and now in 2014 it has continued to weaken against the US Dollar as the Chinese try to keep the same low to assist export growth.

Now it can be argued that Hong Kong Airlines has a jaded history, having been set-up as a longhaul airline in 2006 then changing to fly all business class to London before focusing only on shorthaul routes with Chinese city connection concentration; but investors might well choose to look at this as an advantage, as indeed I do, for the airline has tried, failed and adjusted.

It did not drive itself into the ground by sticking to its original plan, but it was able to see the way the wind was blowing and change course, assimilating some of the best practices from other low cost airlines in the process. Surely this makes the airline far more likely to look at expansion moves very closely indeed, and it proves that the team can, if required, be dynamic and amend the business plan to demand.

This might just be one airline IPO with a significant long term gain for investors.

admin
By admin July 7, 2014 17:04
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