China Postal Airlines’ parent planning IPO, and fleet expansion?

China Postal Airlines operates twenty-two 737 classic freighters and has orders for ten 737-800BCF conversions with Boeing. Following an IPO, will China Postal Airlines further expand its fleet?

China Postal Express & Logistics Co., Ltd (EMS), a subsidiary of Beijing-based China Post, which owns a number of logistics companies, including China Postal Airlines and China Post Logistics, is planning to execute an IPO within three years. China Post Chairman, Liu Aili, announced the subsidiary’s intention to go public last week during a signing ceremony held to recognize strategic cooperation between the company and China Tower, the communications and tower infrastructure services provider. If EMS is to follow in the footsteps of its industry peers SF Express and YTO Express, access to more funds via an IPO will likely support the expansion of the company’s freighter fleet.

For China Postal Express & Logistics, going public has been in the cards since shortly after the company was created in 2010 from the consolidation of the Post’s logistics and Express companies. By May 2012, China Postal Express had already submitted an IPO application to the China Securities Regulatory Commission, but this application was quickly withdrawn in December 2013, due to intense market competition.

At the time EMS withdrew its IPO application, the company’s airline subsidiary, China Postal Airlines, operated China’s largest express fleet, which was comprised of fourteen 737-300Fs and eight 737-400Fs – most of which were operating in overnight express service from the airline’s Nanjing Lukou Airport (NKG) hub. Additionally, the carrier had already outlined plans for larger 757-200PCF freighters, the first four of which would be operated by Air China Cargo on behalf of EMS. China Postal Airlines’ first 757-200PCF ultimately went into service in November 2013.

China’s domestic express market dynamics quickly shifted in the two-year period between 2011 and 2013 when China Postal Airlines suddenly found itself facing a rising Shenzhen-based competitor. Between mid-2011 when SF Airlines put its first 737-300F into commercial service and winter 2013, the express courier managed to build out a portfolio of thirteen aircraft.

Now, SF Express is one of two Chinese couriers with an own-operated freighter fleet that has successfully completed listings on a domestic stock exchange – freighter fleets, in turn, have expanded post-IPO. SF Airlines’ fleet currently numbers more than fifty units while YTO has eight freighters in its fleet. Both carriers have outlined ambitious growth plans over the next five years. China Postal Airlines’ fleet, meanwhile, has only added thirteen aircraft since EMS stalled its plans to go public nearly five years ago.  Apart from a couple 757-200PCF conversions, and ten 737-800BCF conversions with Boeing, the airline does not have additional conversions on order. However, post-IPO, might this change?

Over the next few years, EMS will be just one of a number of air freight logistics companies in China seeking new investments. Last week, the Civil Aviation Administration of China (CAAC) published a list of twenty-eight aviation projects seeking private investment. Ezhou Civil Airport and Air China Cargo were two familiar names on the project list, both of which are seeking billions of dollars in new investments.

China National Aviation Holding Co., which owns a controlling stake in Beijing-based Air China and its logistics subsidiary, Air China Cargo, is looking to sell a stake in the air logistics company that is expected to fetch around US$1.5 billion as it pursues a government-mandated “mixed-ownership” reform. Air China Cargo will tread in the steps of Shanghai-based China Eastern Airlines, whose parent, China Eastern Air Holding Company (CEA Holding) began the process of divesting its cargo and logistics operations from the passenger carrier last year.

In February 2017, CEA Holding’s passenger subsidiary, China Eastern Airlines, sold its Eastern Air Logistics (EAL) cargo subsidiary, which owns freighter-operator China Cargo Airlines and manages the belly space on China Eastern Airlines passenger aircraft, back to its parent, CEA Holding. CEA Holding then sold off a 45% stake in EAL to four companies: Legend Holdings, Global Logistics Properties, Deppon Logistics and Greenland Financial. The four companies hold 25%, 10%, 5%, and 5% stakes in the company, respectively.

Returning to the CAAC’s list, of the twenty-eight initiatives, the most ambitious by far is the Ezhou Civil Airport Project, which is seeking US$5.4 billion in private investment. Although the airport will accommodate both passenger and air cargo, Ezhou Airport is significant as it is also the future site of Shenzhen-based SF Express’ global air cargo logistics hub.

Other sectors targeted for private investment include aircraft maintenance, aviation rescue, UAV Logistics and airborne data communications.

Learn more about narrowbody freighter conversions on 10-12 October at Cargo Facts Symposium, where a roundtable panel discussion will be dedicated to the topic. For more information, or to register, visit

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