(Bloomberg) -- Wang Zhenghua, chairman of Spring Airlines Co., became a billionaire as the stock surged after staging the first initial public offering of a Chinese airline since 2002.
Shares of the low-cost carrier jumped 44 percent on its trading debut on Jan. 21, and climbed by the 10 percent limit for eight straight days, tripling in value. The 10 percent increase today boosted Wang's net worth to $1 billion, according to the Bloomberg Billionaires Index.
"The IPO came at a very good time," said Han Yichao, a Shanghai-based aviation analyst at Chang Jiang Securities, over the phone. "Spring Air is lucky because the whole aviation sector soared last year and shares of most companies have doubled."
Airline stocks are riding a bull market, with the Bloomberg World Airlines Index tracking 31 carriers rising 46 percent since Oct. 13, the lowest level last year. Budget carriers including Southwest
Airlines Co. and EasyJet Plc led gains this year and are among the gauge's 10 best performers.
A global surplus has driven oil prices almost 50 percent lower last year. That in turn cut expenses for jet fuel and boosted the valuation for the aviation industry and Spring Air's offer price for its initial share sale, Han said.
China Eastern Airlines Corp., the nation's second-largest airline by market capitalization, said Friday it expects profit in its ficsal year to rise as much as 60 percent, citing stronger operation capacity and lower jet fuel price.
New Planes
Spring Air plans to buy new aircraft as rising incomes drive up demand for air travel across Asia. In the first 11 months of 2014, mainland Chinese tourists made more than 100 million international trips, topping the travel total for the previous year, according to data from the China National
Tourism Administration.
Wang, 70, started the airline in 2005, and derives the bulk of his wealth from the 26 percent stake in the company.
The billionaire also owns 35.7 percent of closely held Shanghai Spring International Travel Service Co., the parent of Spring Air that the former Shanghai government official founded in 1981 and one of the country's largest travel agencies, according to China National Tourism Administration.
Wang is optimistic about the outlook for budget airlines in China because the market is still dominated by full-service carriers.
"Low-cost airlines has less than 5 percent of the market in China," Zhang Wu'an, a spokesman for Spring Air, said in an e-mailed statement today. "It has a bright market prospect in the future."
Instant Noodles
Wang, whose executives share hotel rooms and eat instant noodles on business trips to cut costs, has given the remaining shares of Spring International to his employees, Zhang said, as the billionaire wanted "the staff to feel they are the owners of the business and they are fighting for their own good."
The surge in Spring Air shares since the IPO also made it Asia's biggest budget carrier, and more valuable than Eva Airways Corp., Air France-KLM Group and Air Canada.
Wang's not the only low-cost airline operator to see his fortune soar. Shares of Luton, England-based EasyJet, Europe's second-biggest discount carrier, reached a record in January and revealed another billionaire in Clelia Haji-Ioannou, the sister of company founder Stelios Haji-Ioannou, age 47, who has a $2.2 billion fortune.
She owns a stake valued at $1.2 billion, according to the Bloomberg Billionaires Index. The stake is held by EasyGroup Holdings Ltd., which also holds the shares owned by her billionaire brother. A second brother, Polys, owns shares through Jersey, Channel Island-based Polys Holding, and has a $1.8 billion fortune.
EasyJet Shares
A 2013 stock exchange filing in the U.K. disclosed Clelia was the beneficiary of about 43 percent of the EasyJet shares held by EasyGroup Holdings. The three siblings together control 35 percent of the airline, a stake valued at more than $3.7 billion.
Richard Shackleton, a spokesman for EasyGroup, declined to comment on the net worth of the Haji-Ioannous.
For Spring Air, the expansion has made the company the largest non-state Chinese carrier by passengers, who were carried on 41 Airbus A320 planes and 73 air routes.
Spring Air has drawn attention by having employees and cabin crew once dress as Spiderman and other characters, and by having flight attendants wear Google Glasses to see how the device can improve customer service.
Source: Bloomberg News by Jill Mao
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