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Spring Airlines Co. rose by the exchange-imposed limit on the Shanghai bourse after staging the first initial public offering of a Chinese airline since 2002 to help meet surging demand in Asia’s largest economy.
The shares opened at 26.15 yuan, 44 percent higher than the 18.16 yuan price in the IPO. The offering of A-shares raised 1.8 billion yuan ($290 million).
Spring Air plans to buy new aircraft as rising incomes drive up demand for air travel across Asia. The company, founded in 2005 by President Wang Zhenghua, is also bracing for more domestic competition after China’s Civil Aviation Administration said last year it would loosen regulations and study tax breaks to encourage more budget carriers in the country.
“Not many new entrants can boast a similar earnings potential,” Zhang Qi, an analyst with Haitong Securities in Shanghai, said by phone. “Longer-term, Spring looks like a good investment.”
Since then 19 new airlines have been started or have announced plans in China, with two slated to operate as low-fare carriers, according to a Nov. 19 estimate by the CAPA Centre for Aviation. Shanghai-based Juneyao Airlines Co. has said it also plans to go public as new airlines start up across the country.
Guangzhou-based budget carrier 9 Yuan Airlines, a Juneyao Airlines subsidiary, offered its first flight last month. A low- fare carrier based in Zhengzhou, an Apple Inc. manufacturing hub, is in the planning stages, according to the aviation consultancy.
— With assistance from Fox Hu in Hong Kong and Aipeng Soo in Beijing.
This article was written by Clement Tan from Bloomberg and was legally licensed through the NewsCred publisher network.