Hong Kong-based Greater Bay Airlines Co. plans to expand its route network into mainland China next year, belatedly entering an essential market after the country remained off limits during the Covid pandemic.

The carrier, a new entrant to an Asian hub dominated by Cathay Pacific Airways Ltd., will first fly to Shanghai and Beijing, and then gradually to cities such as Chongqing and Chengdu, according to Chief Executive Officer Stanley Hui.

“We have to do it step by step, because things don’t happen overnight,” Hui said in an interview with Bloomberg Television.

The airline, which has four Boeing Co. 737 older-generation jets, started commercial operations in July 2022 and flies to a handful of Asian destinations including Japan, South Korea and Vietnam. Former CEO Algernon Yau, now Hong Kong’s commerce and economic development secretary, initially hoped Greater Bay Airlines’ maiden commercial flight would be to Beijing over two years ago.

Hui, previously CEO at Dragonair and Hong Kong’s airport authority, said he intends to take four second-hand 737 planes from Shenzhen-based Donghai Airlines Co., which — like Greater Bay Airlines — was founded by property magnate Bill Wong, who is closely connected to China’s Communist Party.

“We still have a way to go to profitability, that’s why the boss wants this airline to grow faster,” Hui told Bloomberg News in a separate interview Thursday. “That’s why we need more aeroplanes.”

IPO Ambitions

Demand is strong in China, where domestic air travel has recovered way beyond pre-Covid levels, Hui said, noting that airlines in China and Hong Kong did “reasonably well” over the Golden Week holidays in early October.

Meanwhile, the company is laying the groundwork for a stock-exchange listing and has started discussions, Hui said, without disclosing the names of parties involved.

“All business should be looking at an IPO, and that is on the agenda,” Hui said.

Greater Bay Airlines temporarily broke even in March and April thanks to “unusually” high airfares offsetting aircraft being underutilized and filled less than 70%, he said. Hui forecasts the company will be profitable in 2024.

The airline ordered 15 Boeing 737 Max jets in March for delivery from August next year until 2028. It also has a commitment to buy five long-haul 787s. Hui said a decision on firming up that order will be made by 2025.

--With assistance from Ocean Hou and Lauren Faith Lau.

Author: Danny Lee, Yvonne Man and Rishaad Salamat