Air China has become the majority shareholder in Shandong Airlines parent company after an equity purchase and capital injection. In a deal worth $4.77million Air China has brough the shares of two investors in Shandong Aviation Group (SAG), hansteel Financial Holdings, 1.4% and Qingdao Qifa 0.9%.
With this deal, Air China now owns 66% of the company in addition to a 23% stake in the airline itself. The airline is owned by SAG (66%), Air China (23%), and 35% remains publicly traded, giving the flag carrier majority ownership.
Post this, the airline has partnered with two more owners to invest around $1.45bn into Shandong Aviation Group to grow its airline operations.
"After the company takes control of Shandong Aviation…and Shandong Airlines, the company will be able to enhance its overall profitability by further strengthening market layout and deepening its cooperation with Shandong Aviation,” Air China said in a statement to the stock exchange explaining its equity stake.
This will help the flag carrier in increasing its domestic market share and profitability as it tries to recover from the pandemic restrictions. This is significant as China preps up to reopen its international borders after three long years of zero-COVID policy.
Shandong Airlines is an all-Boeing 737 airline operating three 737-700 and 122 737-800s with seven currently grounded 737 MAX 8s.