On October 30, Air China Limited (AIR CHINA) released its third-quarter report, showing revenue of 129.8 billion yuan for the first nine months, up 1.3% year-on-year, with net profit attributable to shareholders reaching 1.87 billion yuan, a 37.3% increase. However, the third quarter saw revenue of 49.1 billion yuan (up 0.9% YoY) but a concerning 11.3% YoY drop in net profit to 3.68 billion yuan.

Concurrently, the company announced a private placement plan to raise up to 20 billion yuan by issuing shares at 6.57 yuan per share—a 23% discount to its October 30 closing price of 8.55 yuan—exclusively to its controlling shareholder China National Aviation Holding Corporation and its affiliate.

The market reacted negatively, with Air China's A-shares and H-shares plunging 8.07% and 6.87% respectively the following day.

Performance analysis reveals Air China now trails competitors across critical metrics: 1. Profitability: Its Q3 net profit decline contrasts with 20.26% growth at China Southern Airlines and 34.37% surge at China Eastern Airlines. 2. Margins: Gross margin (7.06%) and net margin (1.05%) rank last among seven listed Chinese carriers. 3. Operational efficiency: Despite handling 120 million passengers, its load factor trails industry peers.

Financial health remains precarious despite recent capital injections: - 2023: 15 billion yuan A-share placement for aircraft purchases - 2024: 2 billion HKD and 6 billion yuan additional fundraisings - Current debt ratio: 88%, exceeding rivals' levels

The deeply discounted private placement—effectively a "debt-to-equity swap" favoring the controlling shareholder—has raised corporate governance concerns about minority shareholder value dilution. Market reaction suggests investor skepticism about this capital allocation strategy.