Grand China Airlines, a key mainland airline based in Hainan province, is seeking to raise US$2 billion from a Hong Kong initial public offering this year, according to chairman Chen Feng. Grand China Air is the holding firm of four domestic carriers - Hainan Airlines, Shanxi Airlines, Hong Kong-based Hong Kong Airline and cargo carrier Hong Kong Express. The company will list shares as a red chip, which is registered outside the mainland, rather than as an H-share company, according to Mr Chen. 'As a red-chip company, our valuation is much higher than as an H share,' said Mr Chen on the sidelines of the Boao Forum in Hainan, adding that Grand China Air should finish its listing plan by the end of the year. Mr Chen's fundraising target was double the market expectation of about US$1 billion. The Hainan provincial government is Grand China Air's largest shareholder with more than 48 per cent, while US-based billionaire George Soros owns more than 10 per cent. Its Shanghai-listed unit, Hainan Airlines, is the fourth-biggest carrier in the mainland behind Air China, China Eastern Airlines and China Southern Airlines, all of which are traded in Hong Kong. Hainan Air reported a profit of 181.6 million yuan for last year, reversing a loss of 215.8 million yuan in 2005, as it booked gains from the appreciation of the yuan, which cut the value of its foreign currency denominated debts. Shares in Hainan Air jumped 4.8 per cent on Friday, closing at 6.77 yuan. The stock has gained 70.96 per cent so far this year. The company bought controlling stakes in Hong Kong Airlines and Hong Kong Express last year. Mr Chen said the group has more than 130 aircraft that fly to more than 600 mainland cities. UBS and Goldman Sachs had been appointed as financial advisers for Grand China Air's initial public offering, sources earlier said. Mr Soros, who invested US$25 million in Hainan Air in 1995, planned to take an 18.6 per cent stake in Grand China Air by swapping his Hainan Air shares, sources said. Grand China Air took control of Hainan Air through a US$700 million private share placement in June last year. Other assets that might be injected into Grand China Air's listing unit included Changan Airlines, Xinhua Airlines and Hainan Island's Haikou Airport, sources said. The company might also bring in foreign airlines as strategic investors for its Hong Kong listing, sources said.