By XUE Bingbing
Air China announced on Wednesday that the company had spent 33 million yuan (US$4.8 million) to acquire an additional 2.3-percent of Shandong Airlines, becoming the process controller of the provincial airline.
Now holding 49.41 percent of Shandong Airlines, Air China was already the largest shareholder before the transaction. Air China acquired Shandong Airlines to save it from collapsing.
Air China has also joined with infrastructure construction service provider Shandong Hi-speed Group to invest 10 billion yuan in Shandong Airlines to ease the financial pressure on the struggling airline.
In Q1 2021, the liability ratio of Shandong Airlines reached 100 percent. In June that year, it raised a loan of 2.6 billion yuan from a bank, but it was far from enough.
Shandong is listed in Shenzhen as domestically-listed foreign-investment shares. The mechanism was set up in 1992 for overseas investors to trade with foreign currencies. In 2001, China Securities Regulatory Commission permitted the exchange of B shares via the secondary market to domestic citizens.
The only way for Shandong Airlines to survive was to become a subsidy of Air China. As more Chinese companies went public overseas, the B-share market became dormant and now barely exists.
