Sino-Singapore Jingwei, May 11. On the evening of the 10th, China Eastern Airlines (hereinafter referred to as China Eastern Airlines) released a plan for the non-public issuance of A shares, and the proposed fundraising does not exceed 15 billion yuan.
For nearly 30 billion to buy 38 aircraft
According to the announcement, 10.5 billion of the funds raised by China Eastern’s non-public offering of shares will be used for the project of introducing 38 aircraft, with a total investment of 28.924 billion yuan. Another 4.5 billion yuan will be used to supplement working capital. China Eastern Airlines Group intends to subscribe for this non-public offering of shares in cash with an amount of not less than RMB 5 billion.
Source: Announcement
Regarding the significance of the non-public issuance of shares, China Eastern said that the aircraft types to be introduced this time include domestic C919 aircraft and ARJ21-700 aircraft, which will help the company continue to firmly support the national strategy of domestic large aircraft and help the development of domestic large aircraft industry clusters.
In addition, affected by the outbreak of the new crown pneumonia epidemic in early 2020, the company’s asset-liability ratio has been relatively high in recent years, which may cause the company to face certain debt repayment pressure. Especially under the influence of the new crown pneumonia epidemic, the company’s short-term risks and uncertainties have increased . In order to avoid the current high level of asset-liability ratio restricting the company’s business development, the company can improve the company’s capital structure and reduce the asset-liability ratio through this non-public issuance of A shares.
Judging from the specific situation of the 38 aircraft project disclosed by China Eastern, the models include 4 C919 aircraft, 24 ARJ21-700 aircraft, 6 A350-900 aircraft and 4 B787-9 aircraft.
In terms of specific price, the catalog unit price of C919 is 653 million yuan, which is only about one-third of the catalog unit price of A350-900 and B787-9.
Source: Announcement
China Eastern disclosed that, as the world‘s first launch user of the domestic large aircraft C919, the company has officially signed the first batch of C919 large passenger aircraft purchase contracts with COMAC, and will become the world‘s first airline to operate the C919 large passenger aircraft.
Announcement of shareholder return plan
While disclosing the non-public issuance plan, China Eastern also announced the shareholder return plan for the next three years (2022-2024).
The announcement shows that under the premise that the company’s operating conditions are good and the cash flow is sufficient to meet the company’s normal operation and sustainable development, China Eastern will actively use cash dividends to return shareholders, and the accumulated profits distributed in cash in the past three years will not be less than Thirty percent of the average annual distributable profits in the last three years; in principle, the company implements an annual cash dividend every year.
From the specific situation, China Eastern proposes three differentiated cash dividend policies:
1. If the company’s development stage is mature and there is no major capital expenditure arrangement, when profit distribution is carried out, the proportion of cash dividends in this profit distribution shall be at least 80%;
2. If the company’s development stage is mature and there are major capital expenditure arrangements, when profit distribution is carried out, the proportion of cash dividends in this profit distribution should be at least 40%;
3. If the company’s development stage is in the growth stage and there are major capital expenditure arrangements, when profit distribution is carried out, the proportion of cash dividends in this profit distribution should be at least 20%.
According to China Eastern’s previous disclosure, the company will have a net loss of 12.214 billion yuan in 2021, and the parent company’s accumulated distributable profits will be negative. The company does not have the prerequisites for cash dividends. The company’s board of directors agrees that the company will not distribute cash dividends in 2021. Regarding the performance loss, China Eastern said that it was mainly affected by the severe impact of the epidemic on the aviation industry. (Sino-Singapore Jingwei APP)
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