NICHOLAS IONIDES / SINGAPORE
Move boosts carrier's ambitions to expand domestic and international freight operations
China Southern Airlines has boosted its cargo activities by acquiring a 49% stake in the small domestic freight and mail carrier China Postal Airlines.
Guangzhou-based China Southern will pay 150 million yuan ($18 million) for the stake. The remaining 51% will be retained by the China State Post Bureau.
China Postal, based at Tianjin, has an airmail services monopoly as most mail and freight in China is transported by road or rail. Its fleet comprises five Shaanxi Aircraft Y-8 four-turboprop freighters. The deal boosts China Southern's plan to build its freight operations inside and outside China. It is also the latest in a series of equity-based tie-ups to involve Chinese carriers during the past two years.
China Postal has been left out of consolidation sweeping through the Chinese airline industry. Its acquisition also casts doubt on the future of China Sky Aviation Enterprises. This loose group of six semi-independent carriers was formed last year to better compete with China's three dominant airline groupings. Other members include Shandong Airlines, Shanghai Airlines, Shenzhen Airlines, Sichuan Airlines and Wuhan Airlines. Many observers believe the group will eventually break up as there are no equity links holding it together.
China Southern has been working to build its freight operation since it added a wet-leased Boeing 747-400 freighter two years ago for use on its first all-cargo services to the USA. It has since purchased two 747-400Fs, the first of which was delivered last week.
China Southern already has close ties with China Postal as last year the former's parent, Southern Airlines Group, agreed an extensive partnership with the small operator covering mail and cargo transport as well as passenger ticket sales.
China Southern has secured a 12 billion yuan ($1.45 billion) line of credit, available for three years, from the Bank of China. It is expected to be used for fleet expansion and infrastructure investments, primarily related to the future opening of a new airport at its Guangzhou base.
Source: Flight International
