Major airlines have been scrambling to take over smaller operators since the Civil Aviation Administration of China (CAAC) announced in July that it favoured a merger of 10 airlines into three groups, based on the operations of Air China, China Eastern Airlines and China Southern Airlines.
The CAAC has said that the three groups will include the seven other airlines it directly administers, namely China Northern Airlines, China Northwest Airlines, China Southwest Airlines, China Xinjiang Airlines, CNAC-Zhejiang Airlines, Great Wall Airlines and Yunnan Airlines.
Just over a week after the plans were revealed, listed China Southern announced that its parent, Southern Airlines Group, was acquiring smaller carrier Zhongyuan Airlines. Although Zhongyuan is not one of the CAAC-administered airlines, the deal has won the regulator's approval.
Second-tier carrier Hainan Airlines has since moved to boost its politically strong position in the domestic industry. At the end of August, the ambitious airline announced that it would form a new domestic carrier to assume the operations of Changan Airlines in a move amounting to a takeover.
Hainan is to purchase a majority stake in new company Changan Airlines Industrial in partnership with existing Changan Airlines. By supplying four aircraft, other equipment and cash, and in partnership with parent Hainan Airlines Holdings, it will take a combined stake of 86.2%. Changan Airlines itself will take 13.8% after contributing its aircraft and cash.
China Eastern, meanwhile, remains in negotiations to take over Great Wall Airlines and says that it expects to complete the purchase of a 55% stake by the end of the year.
Shanghai-based China Eastern, meanwhile, has been making headlines for more politically sensitive reasons. It has been talking to Taiwan's China Airlines (CAL) about the sale of a 25% stake in subsidiary China Cargo Airlines.
China Cargo is the country's only all-cargo carrier, 70%-owned by China Eastern and 30%-owned by China Ocean Shipping. Eastern's board has tentatively approved the sale of a stake to CAL and industry sources say the CAAC is willing to approve the deal.
A green light from Taiwan may prove more difficult to secure, however. China and Taiwan have been rivals since communists forced their opponents out of China in 1949. Direct flights to and from the mainland have been banned since then and both sides restrict investment.
Source: Airline Business
