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Air China IPO Successful After High-End Pricing


China's biggest international carrier raised slightly more than its target of $1 billion at its initial public offering.

Air China sold nearly three billion shares at 38 cents each for its listings in Hong Kong and London. This was at the high end of its target price range.

Steven Leung, the Hong Kong head of institutional equity sales at the Singapore investment bank UOB Kay Hian, said the price reflects the strong market demand for Chinese investments.

"Quite clear[ly], the pricing close to three dollar is not attractive. But because the market sentiment is so strong and oil prices come down from the peak of $50 level, there will be good upside potential."

Air China will spend nearly $2 billion buying 41 passenger planes by 2006 to meet growing air travel demand in China. The company has more than $4 billion in debt.

China and the Gulf Cooperation Council or GCC, will begin their first round of negotiations over a free trade agreement next month. The GCC nations are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The deal is expected to include tariff reductions and efforts to simplify the flow of goods and investments between China and GCC nations.

Trade between China and GCC nations is estimated to exceed $20 billion this year.

United Airlines has started the first U.S. commercial flight to Vietnam since the Vietnam War ended nearly 30 years ago. The last U.S. commercial flight to leave the country was a Pan American Airlines jet in 1975.

The daily service will fly between San Francisco and Ho Chi Minh City, via Hong Kong, and is expected to become more popular as the United States and Vietnam expand trade and tourism deals.

Vietnamese air travel is expected to grow more than 10 percent a year for the next decade, keeping pace with the country's economic expansion.

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