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Air China wins Shenzhen Air control for southern hub
(Agencies)
Updated: 2010-03-22 13:41
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Air China Ltd will gain control of Shenzhen Airlines Ltd through a 682.1 million yuan ($100 million) investment, giving the nation's largest international carrier a hub in southern China.
Air China's stake in the Shenzhen-based carrier will rise to 51 percent from 25 percent following the capital injection, it said in a statement on March 20. City-controlled Shenzhen International Holdings Ltd will also invest 348 million yuan and raise its stake to 25 percent, according to the filing.
A majority stake in Shenzhen Air, China's fifth-biggest carrier, will allow Air China to challenge Guangzhou-based China Southern Airlines Co in the Pearl River Delta, China's manufacturing hub.
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"This is definitely a good move for Air China," said Li Lei, an analyst at China Securities Co in Beijing. "The carrier has now built up a balanced network all over the country."
Shenzhen can become the fourth major hub for Air China, said China Securities' Li. The carrier already has hubs in Beijing and Shanghai, serving eastern and northern China, and one in Chengdu, covering southwestern China.
Shenzhen Air has more than 100 planes and the group company has more than 14,000 employees. It made a loss of 863.7 million yuan last year, according to the statement. The private carrier had a "shareholder's deficit" of 2.1 billion yuan as of Dec 31, the statement said.
Air China, the world's largest carrier by market value, rose 0.2 percent to 12.35 yuan at 10:01 am in Shanghai trading. The carrier earlier this month announced plans to raise about $954 million selling new shares.
In Hong Kong, Air China fell 2.2 percent to HK$7.73. Shenzhen International lost 1.6 percent to 62 HK cents.
