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State approves airline mergers
2002/02/06

Beijing - The government has given the final green light for the merging of the existing nine state-owned airlines into three aviation groups, various media report.

The three biggest airlines will swallow up six smaller ones. China Southern will merge with China Northern Airlines and Xinjiang Airlines into a group with 180 aircraft, 50.1 billion Renminbi (US$ 6.05 billion) in assets and more than 34,000 employees, Reuters writes on Tuesday.

Air China will unite with China Southwest Airlines and China National Aviation Corporation, creating a group with 118 planes, over 20,300 workers and 56.06 billion Renminbi (US$ 6.77 billion) in assets.
China Eastern is to merge with China Northwest Airlines and Yunnan Airlines. The group will have 47.3 billion Renminbi (US$ 5.71 billion) in assets, 118 airplanes and more than 25,000 members of staff.

The state formally approved the plan late last month, the Civil Aviation Administration of China (CAAC) announced on Tuesday. According to CAAC-minister Liu Jianfeng, the merging of the airlines will start soon, with the process completed soon, China Daily reports on Wednesday.

Last year, airline officials said the consolidation would be completed by the end of this year. However, analysts predict it will take longer because of the complexity of the deals, and the many assets and debts involved, Reuters writes.

Regional airlines can in the future decide for themselves whether they want to join any of the three giant carriers.

With the reconstruction, the government aims to strengthen the position of the national airline companies, facing a stronger global competition now that China joined the World Trade Organization (WTO).

The CAAC further announced plans to restrict air routes involving Beijing, Shanghai and Guangzhou, China Daily writes. Starting this summer, only airline companies with headquarters in those cities will be able to fly the lucrative routes. Around the start of winter, flights transferring through the three cities will also be stopped.

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