Regional carrier Hong Kong Airlines International Holdings Ltd filed for the city's first-ever dual currency initial public offering, looking to tap a massive pool of yuan deposits in local banks. The IPO would be a landmark deal for Hong Kong, which is keen to bolster its position as a global hub for trading in the Chinese currency. It established a framework for shares to also trade in yuan in 2011. The carrier, partly owned by Chinese airline-to-logistics conglomerate HNA Group, could raise about $600 million to buy new aircraft, according to a source with direct knowledge of the plans. The draft prospectus contained no details on the deal size or number of shares on offer. "There's a tremendous amount of yuan sitting idly, mainly being held by retail investors," said the source, who declined to be identified because details of the IPO have not been officially announced. "For them, instead of putting the money in the bank and getting just 1 or 1.5 percent interest rates from banks...maybe they would rather get a better return instead." Yuan deposits in the city, held mainly by Hong Kong residents, totaled about 937 billion yuan ($153 billion) at the end of July. So far, only two companies have taken advantage of the dual currency framework with toll-road operator Hopewell Highway Infrastructure Ltd selling some secondary shares in yuan and Hui Xian Real Estate Investment Trust selling IPO shares in the Chinese currency. Incentive Plan The airline, which operates 23 aircraft and flies to almost 30 cities around Asia, hired JPMorgan as sole sponsor of the IPO, according to the draft prospectus. The company will offer an incentive plan to lure retail investors, giving discounts or free tickets for IPO subscribers who keep their shares for a certain period of time, the source added. The plan is similar to those offered by other airlines such as Malaysia's AirAsia X Bhd and Japan's ANA Holdings Inc. AirAsia X offered free tickets for retail investors who subscribed to a minimum of 10,000 shares in its IPO in 2013 and kept them for a least one year. ANA has a shareholder incentive plan offering discounts on flights, tour packages and hotels. While Hong Kong Airlines is a much smaller player than the city's flag carrier Cathay Pacific Airways Ltd, it wants to increase its share of the full-service market out of Hong Kong in the coming years. It has ventured into the low-fare business after converting its subsidiary Hong Kong Express into a budget carrier early this year, making it the first airline to be based out of Hong Kong to have that business model. China's HNA Group also owns mainland carrier Hainan Airlines and leasing firm Hong Kong Aviation Capital. (Reuters)