WUHAN, China – China’s privately owned Juneyao Group intends to list its aviation arm in 2010 and will buy into more airlines if opportunities arise, according to a senior executive.
Juneyao Air, the group’s wholly owned subsidiary, has sold a 25 percent stake to an unidentified foreign investor for $100 million, Wang Junhao, the group’s vice-chairman, told Reuters.
He said Citigroup (C.N: Quote, Profile, Research) would advise on the initial public offering of Shanghai-based Juneyao Air, which began operations in September 2006 and had a profit of 18 million yuan last year.
Wang told Reuters last July that it aimed to list the unit in 2008 and was in talks at the time to sell about 30 percent of it.
Speaking on the sidelines of a forum at the weekend in the central city of Wuhan, Wang said Juneyao Group, which took a controlling stake in Okay Airways Co in early 2006, had bought more than 30 percent of Chengdu-based United Eagle Airlines, another privately owned carrier.
“Aviation is our core business, and we want to make it big and strong. If there are companies in line with our strategy, we will definitely continue to invest,” he said.
Wang said his company, which also invests in the real estate and diary industries, had yet to decide whether to merge the other two carriers into Juneyao Air prior to the IPO.
Juneyao Air will expand its fleet to 40 by 2010 and has ordered six Airbus A320 planes for delivery next year, he added.
China opened its state-monopolised aviation industry to the private sector in 2004 and now has over 10 carriers like Juneyao Air, which operates 27 regional routes to cities including Kunming, Haikou, Hangzhou and Harbin.
Wang said privately owned carriers, in order to compete, had to offer better services than major state-owned players such as China Eastern Airlines, China Southern Airlines and Air China.
Juneyao Air, whose average load factor stands at 80 percent, charges similar fares to the three flagship carriers but provides much more legroom, he said.
Difficulty recruiting pilots is the biggest challenge plaguing the privately owned carriers, Wang said, adding that his firm planned to hire 20 foreign pilots this year.