China Southern is said to mull Hong Kong IPO of cargo unit

[HONG KONG] China Southern Airlines is exploring a Hong Kong initial public offering (IPO) for its cargo business after shelving plans to do so in Shanghai, according to sources familiar with the matter.

The China Southern Air Logistics IPO could raise at least several hundred million US dollars, the sources said, asking not to be identified because they were not authorised to speak publicly. Deliberations are still at a preliminary stage, they said. China Southern did not respond to requests for comment.

The deal may be coming at a tricky time for the company, which relies on Chinese exports that are under threat because of the country’s trade war with the US. Though other listing plans have gone ahead in Hong Kong recently, they have largely been companies with limited exposure to US tariffs.

Guangzhou-based China Southern Group is one of the world’s largest carrier giants, with stakes in 10 airlines and operating 932 commercial jets. It carried 165 million passengers and handled 1.8 million tonnes of cargo and mail volume in 2024, according to its most recent financial report.

But the cargo unit’s fortunes have been on the decline, even before the tariffs kicked in, because of the slumping Chinese economy. Sales and profit fell 23 per cent and 48 per cent, respectively, in 2023, the last full year of earnings publicly available for the company.  

China Southern Airlines previously had plans to spin off the cargo unit and list it in Shanghai, but it said in February said it was scrapping the plan, citing changes in the market environment.

As for Hong Kong listings, they were on track to double to US$22 billion this year, according to Bloomberg Intelligence estimates made before US President Donald Trump announced his tariffs that roiled global markets. Still, big deals such as that of battery giant Contemporary Amperex Technology Co Limited are going ahead. BLOOMBERG