China Southern Airlines announced Tuesday the formation of five new subsidiary companies which will offer new consolidated operations and marketing management.

According to Yan Zhiqing, president of China Southern Air Holding Co (CSAH), the venture's parent company, the five new enterprises will include:

* Tourism Development Co Ltd CSAH, which will focus on hotels and tourism;

* Aviation Service Co Ltd CSAH, which will highlight air transport-related resources and services;

* Construction and Development Co Ltd CSAH, which will operate the airline's land access, real estate, project supervision and management, property management and servicing;

* Passenger and Cargo Service Co Ltd CSAH, which will operate airline ticketing, air cargo sales agent and express delivery; and

* Import and Export Trade Co CSAH, which provides import and export agent services and domestic stock agent services.

"These five companies will combine the resources and business expertise under the CSAH umbrella,'' Yan said.

The five ventures are State-owned self-investment limited companies with independent corporate qualifications.

Experts say the move signifies that China Southern, currently one of the largest airlines in China, is readjusting its resources after its successful merging with China Northern Airlines and Xinjiang Airlines last year.

The company said additional sub-category companies will be established by the close of 2003.

Analysts say such measures will help strengthen the company's core domestic and global passenger and cargo competitiveness.

Separating and operating these accessorial companies will strengthen the overall group's ability to compete on an equal footing against international rivals.

"The accessorial business of China Southern must be part in parcel with the development of the main airline business,'' said Yan.

The company promises that the interests of smaller shareholders in the venture will not be impaired in the consolidation moves. China Southern Airlines went public in both the Hong Kong and New York stock markets in 1997. It also went public on the Shanghai Stock Exchange in July, selling 1 billion A shares.

Instead, Yan said the separation of the main and accessorial business departments and consolidation reforms will strengthen the share position of minor investors.

"We have taken their interest into consideration, and the consolidation reform measures will reduce the burden of China Southern's main air transportation business... benefiting both small and corporate stock shareowners,'' he said.

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