Shares of Air China jumped 5.86 per cent to close at HK$5.42 yesterday after the world's largest airline by market value said it would issue 1.05 billion yuan (HK$1.29 billion) in new A shares to its state-owned parent company.
Trading in the stock had been suspended since April 20, pending an announcement about the share sale.
'The money it will raise from the new share issue is not a lot for a carrier but it still will help to relieve some debt stress,' said Geoffrey Cheng, an analyst with Bocom International.
Last year, Air China's interest bill for its bank loans was 1.8 billion yuan.
Cheng said shares had risen largely because they were playing catch-up with the stock prices of other airliners. 'During the week its trading was suspended, shares of other carriers had been rising,' he said.
He said airline shares had rallied because fuel prices in the first half of this month had been steadily easing.