Air China Crash Throws Listing Into Doubt: Analyst

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Shanghai April 15: : Air China’s plans for a stock market listing have been thrown into doubt after one of its passenger jets carrying 166 people crashed in South Korea on Monday, ending a 47-year record of safe flying, analysts said.

Most of those aboard Air China flight CA129 are assumedd ead, after the Boeing 767 flying from Beijing ploughed into a mountain near Pusan. It was the flag carrier’s first crash.

Analysts had expected China’s biggest airline, in terms of traffic volume and asset size, to go public in 2002 or 2003 via a listing in mainland China or Hong Kong. Whether it can still do so now depends on two factors -- the cause of the accident and how it hits revenues, they said.

"It will depend on whether the fault is regarded as Air China’s or other reasons," said aviation analyst Karen Chan at Credit Suisse First Boston in Hong Kong.

"If it is the fault of Air China, it will raise the doubt of the quality of the company and affect their listing plan. Definitely, this will have some negative impact on the reputation of the company." An official at the Beijing-based airline said the firm was investigating the crash but had no further comment.

Flagged as one of three airlines that China wanted to build into internationally competitive carriers, Air China has said it wanted to list to raise funds for its future development.

Competition in China’s aviation sector has heated up since regulators forced 10 airlines to merge into three giant groups.

Air China is merging with China Southwest Airlines and China National Aviation Co Ltd (CNAC), and had appointed CITIC Securities as adviser for the restructuring. The airline had also shortlisted HSBC Securities, Merrill Lynch and UBS Warburg for an overseas share sale. But listing plans may have to be shelved if the crash severely damages Air China’s reputation as the nation’s safest airline and passengers switch to competitors, analysts said.

"Investors have never been that hot about this stock anyway," said an aviation analyst at a US investment bank who declined to be identified.

"Because unlike the other two airlines, this one really hasn’t done well in terms of operational performance," the analyst said, referring to China Eastern Airlines and China Southern Airlines.