Airline Sold for RMB 800 Million Yuan on JD Auction

Airline Sold for RMB 800 Million Yuan on JD Auction

by Vivian Yang

An airline company was sold on JD Auction at RMB 800 million yuan on Sept 30th, marking not only a landmark for online auctions, but also the first airline auction event in China’s civil aviation history.

The airline is LJ Air or Longjiang Airlines Co.Ltd based in Harbin, Heilongjiang province in Northeast China. Nighty-eight percent of its stock rights were sold in the online auction with a premium rate as high as 145%.

LJ Air is the smallest airline in China, running only five rented A320 aircrafts between Harbin and several cities in China including Hefei, Zhuhai, Yinchuan, Lanzhou and Urumqi. It was founded in 2014 when investments of social capital were encouraged in the airline industry. However, due to limited resources and scale, LJ Air has struggled in the past few years, and the COVID-19 outbreak was the last straw.

Prior to the auction, the company was evaluated at RMB 419 million yuan. Its total assets were RMB 1.234 billion yuan, with liabilities of RMB 822 million yuan, which means its asset-liability ratio is 66.61%.

As the auction unfolded online, 33,851 people watched the process on JD.com. Experts are interpreting the sale as a strong sign for the country’s domestic tourism recovery following the lockdown caused by the epidemic earlier this year. The sale at the premium also reflects the value of scarce licenses of airlines operating in China that LJ Air possesses and investors’ continued confidence in the future of small and medium-sized airline companies in China.

 

(vivian.yang@jd.com)

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