Shanghai Airlines (SAL) is hungry for takeovers as it prepares to go public later this year and add new international routes in Asia. Targets could include carriers in the China Sky Aviation Group (CSAG) alliance.
"We may buy airlines in CSAG or other airlines in China. That would not be surprising," says senior vice-president Fan Hongxi. CSAG is a loose alliance of six "private" airlines, including SAL, created in response to the consolidation of ten state-owned carriers now taking place. SAL is already talking with Shandong Airlines about a joint investment in fellow CSAG member Sichuan Airlines.
The group includes as members China Postal Airlines, Shandong Airlines, Shanghai Airlines, Sichuan Airlines, Shenzhen Airlines and Wuhan Airlines.
Internationally, SAL is seeking closer ties with foreign carriers. Codeshares with Northwest Airlines or United Airlines are "not so far away", says Fan.
Takeovers and investments come as cash-rich SAL aims to raise between 800 million yuan ($97 million) and one billion yuan by issuing around 200 million shares on the Shanghai bourse.
But bureaucratic wrangling and the impact of the US terrorist attacks on world markets could delay November's share sale. SAL's sustained profits, heading towards 2.2 billion yuan this year alone, should ensure the sale is well received when it finally goes ahead. Revenue from the equity sale will be used to pay for aircraft and commercial businesses, possibly takeovers, says Fan.
SAL is meanwhile awaiting government approval to lease five or six more Boeing 737-800s, three additional Boeing 767s and two more Bombardier CRJ-200s for delivery between 2002 and 2005. It plans a fleet of 40 aircraft by 2005, against the 21 it now flies.
The aircraft will be needed to serve new routes. SAL added Vladivostok twice-weekly on 18 September using Boeing 737-700s, opening a new link between China and Russia targeting businessmen from both countries and tourists from around the Shanghai region.
Japan, then Korea, Singapore and Vietnam, are among countries to be added when official approval comes. SAL expects to win more routes after 2002 when the Civil Aviation Administration of China (CAAC) sheds its airline interests, becoming an independent regulator.
SAL hopes Taiwanese authorities will allow flights via Macau if direct air links cannot be agreed. "Perhaps this will be the first step. It depends on the Taiwanese Government. For China there is no problem," says Fan.
China Eastern Airlines is taking a 25% stake in Qingdao's Liuting International Airport. Along with its partners, Civil Aviation Administration of China and Qingdao's local government, the airline will fund the expansion of the airport in the runup to the 2008 Olympic Games. The coastal city has been nominated as the venue for sailing events.Source: Flight International
