Hainan Airlines is taking a majority stake in China Xinhua Airlines in the latest consolidation move following last year's demands, from the Civil Aviation Administration of China (CAAC) for mergers among the country's carriers.
Hainan has signed a conditional agreement to buy 51% of Beijing-based China Xinhua from a state-owned group and claims to have secured State Council approval. Shareholders are to approve the deal next month. China Xinhua started operating in 1993 and runs nine Boeing 737-300/400s.
Hainan and other solid second- and third-tier carriers have sought desperately to expand through acquisitions over the past eight months, fearing a loss of control if the CAAC extends a consolidation order beyond the 10 carriers it directly controls. There are more than 30 carriers in China, many operating in the red.
The CAAC said last year that all 10 carriers under its direct control would be merged into three groups led by Air China, China Eastern Airlines and China Southern Airlines. The other seven are China Northern Airlines, China Northwest Airlines, China Southwest Airlines, China Xinjiang Airlines, CNAC-Zhejiang Airlines, Great Wall Airlines and Yunnan Airlines.
Last year Hainan bought Changan Airlines.
Source: Flight International
