More Chinese are travelling abroad, a trend which will benefit Air China

It sold 2.8 billion shares, or 31% of its equity, at HK$2.98 ($0.38) each, near the top of a HK$2.35-$3.10 range.

Strong demand meant its shares were more than 83 times oversubscribed by ordinary Chinese investors.

The Hong Kong market has been performing well and as a new listing, Air China should see strong demand.

Its flotation price values the business at nearly 11 times its projected 2005 earnings. By contrast, rivals China Eastern Airlines and China Southern Airlines trade at 11.8 times and 14.9 times forward earnings, respectively.

Going for growth

Air China absorbed China Southwest Airlines and Zhejing Airlines under a broad consolidation of China's fragmented airline industry.

It now has a 35 percent market share of China's 20 busiest domestic routes and 51.4% of China's international market.

Air China is the last of China's three large airline groups to list and due to heavy demand from individual retail investors, the public portion of the float was lifted to 40% of the offering from 10%, after it was oversubscribed 83 times.

Institutional investors were also keen on the stock, placing orders for 37 times more Air China shares than were available to them.

Cathay Pacific Airways, Hong Kong's dominant airline, paid HK$2.697bn for 905 million shares in Air China - 32.3% of the shares offered.