China Express IPO approved

China Express Airlines Co Ltd, China's only airline focused on regional operations with both passenger and freight air transportation, received approval from the China Securities Regulatory Commission this week for a potential initial public offering.

Chongqing-based China Express is expected to become the first listed regional carrier, which would also make it the seventh airline company listed on the A-share market. Founded in 2006, China Express has established five operation bases, including those in Guiyang, Dalian and Xi'an.

In June last year, regional flights accounted for 96 percent of the company's more than 80 total routes.

China Express reported revenue of 1.29 billion yuan ($200 million), 1.79 billion yuan and 2.55 billion yuan from 2014 to 2016, and net profits of 124 million yuan, 260 million yuan and 337 million yuan, in each year respectively.

In the first six months of last year, the carrier achieved revenue of 1.53 billion yuan and net profit of 172 million yuan, according to its earnings report.

By 2017, it had 35 aircraft in operation, mainly Bombardier CRJ900NG and Airbus A320 models. Some 77.5 percent of its flights were punctual, according to the company.

From 2017 to 2036, China will need 1,070 regional jets with 70 to 130 seats, making it the third-largest regional aviation market after the United States and Europe, according to an August report by Brazil-based aircraft manufacturer Embraer SA.

Embraer said high-speed trains will connect about 80 percent of China's regional capital cities, with regional flights expected to cover those areas that high-speed trains cannot.

The central government has also issued favorable policies to boost the growth of regional aviation. During the 13th Five-Year Plan (2016-20) period, China is expected to build 43 new regional airports.

Li Guijin, a professor at the Civil Aviation Management Institute of China, said: "The regional aviation market is still in the initial stages of development. Regional airlines should actively cooperate with larger carriers, for example in areas such as code sharing. The collaboration between Air China and China Express is one positive example.

"Meanwhile, most plateau airports are in western China. For regional aviation, this is one of the best markets and it has brought a lot of opportunities. There should be more suitable aircraft produced for flying in the high-altitude areas."