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China's EAL sets its sights on listing and becoming the 'Chinese FedEx'

AS China's first company in the aviation sector to launch mixed-ownership reform, Eastern Air Logistics Co, the freight unit under parent company China Eastern Air Holding Co, is now heading towards going public.

Management is exploring a new business mode instead of remaining a traditional aviation or logistics company in order to achieve the goal of going public, reported China Daily.

In June, Shanghai-based China Eastern Air Holding Co sold a 55 per cent stake in its wholly-owned Eastern Air Logistics to external investors and its core employees, in a effort to reduce EAL's debt ratio and strengthen its market competitiveness with the help of the newly introduced partners.

As a result of the sharehold restructuring, Legend Holdings Corp holds 25 per cent, Global Logistic Properties Ltd holds 10 per cent, courier company China Deppon Logistics Co has five per cent and Greenland Financial Holdings Group has five per cent. The remaining 10 per cent was sold to EAL's core employees.

General manager of Eastern Air Logistics, Li Jiupeng, said the company will try its best to lay the groundwork for the listed plan, including exploiting markets, ending its reliance on the parent company, making up the operating loss rapidly, raising its continuous profit-making capability, and satisfying all the requirements for being a listed company.

According to Mr Li, EAL made a CNY428 million (US$64.998 million) profit in 2016, and its total asset value after the ownership reform was CNY4.1 billion, which means the company has to double its price-to-earnings ratio to reach the goal of 20 before being listed.

"Our goal is to become the Chinese FedEx, DHL and UPS. It will be a high-end service provider in accordance with the logistics industrial ecosystem," Mr Li said.

After the restructuring, Eastern Air Logistics will expand its air cargo-based business into more profitable sectors including cross-border e-commerce, logistics and warehouses, logistics solutions, high-end delivery and related fields, said president of China Eastern Air Holding Co, Liu Shaoyong.