Air China Ltd, the nation's flagship carrier, is awaiting government approval to issue A shares. The China Securities Regulatory Commission will assess the airline's application tomorrow.

If approved, Air China would be the second major State-owned enterprise to go public on the Chinese mainland following Bank of China (BOC) after the government lifted its year-long ban on initial public offerings (IPOs) in May. BOC was listed in Shanghai earlier this month.

Air China plans to issue no more than 2.7 billion yuan-denominated shares on the Shanghai Stock Exchange to institutional and public investors, the Hong Kong-listed company said in a draft prospectus.

The issue price would not be lower than 90 per cent of the average closing price of Air China's H shares, the company said.

"The listing on the Chinese mainland will provide a new financing channel for Air China. We will have more choices to finance the future expansion of Air China," said Rao Xinyu, Air China's board secretary.

Rao declined to disclose how much capital Air China planned to raise through the listing.

Analysts said the total capital would likely amount to 8 billion yuan (US$1 billion).
Air China would use the fund to finance the purchase of 20 Airbus A330-200 aircraft, 15 Boeing 787s and 10 Boeing 737-800s as well as its airport expansion project in Beijing, the company said in its IPO application. The aggregate catalogue price of the 45 aircraft is US$5.68 billion. The deals were clinched last year and at the beginning of this year.

Analysts said Air China's stock performance on the mainland is likely to be better than the other two major Chinese aviation groups China Eastern Airlines and China Southern Airlines.