China Southern Looks To Parent To Cut Debt

 

China Southern Looks To Parent To Cut Debt

China Southern Looks To Parent To Cut Debt

China Southern Airlines, the country’s largest airline by fleet size, said on Monday its state-owned parent was considering injecting capital into the company to lower its debt level.

The airline, which did not provide details of the amount being considered, was also studying a non-public issue of new shares to its parent, China Southern Air Holding Company, it said in a statement to the Hong Kong stock exchange.

Based in China’s southern city of Guangzhou, China Southern’s net debt stood at CNY75.8 billion yuan (USD$11.9 billion) at the end of 2011, while its ratio of net debt to total equity was 201 percent last year compared with 211 percent in 2010.

“It’s a surprising move and the injection could be a sizeable amount as trading of the stock will be suspended,” said Kelvin Lau, an aviation analyst at Daiwa Securities.

China Southern said it had requested a trading suspension from June 5.

The airline last month reported a 74 percent slide in first-quarter net profit to CNY319 million yuan due to a slowing domestic economy and rising jet fuel prices.

(Reuters)



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