China Southern Airlines and Air France-KLM said they have agreed
to hold exclusive talks over establishing a joint-venture cargo
airline in China.
"It indicates discussions between the two companies have entered
a one-to-one, in-depth phase," Saturday's Shanghai Securities
News quoted unnamed analysts as saying.
Xu Jiebo, vice general manager of China Southern, said January
last year that his company was seeking cooperation with Air
France-KLM and other Sky Team member airlines.
"China Southern surely hopes the foreign investor will hold the
biggest possible share if the negotiation turns out to be
successful," said Xu.
A foreign company is allowed to possess a 25 percent stake, at
most, in a Chinese airline, or no more than 49 percent by two
foreign investors, according to China's regulations.
Analysts believe that China Southern prefers European and
American airline companies as investors because it hopes to promote
sales of cabin space for cargo planes on their way back to China
from abroad.
As one of the three largest Chinese carriers, China Southern is
the only one that does not have a cargo transport unit -- China
Eastern and COSCO Group established China Cargo Airlines in 1998,
while Air China set up Air China Cargo in 2003.
Jade Cargo International, established in 2004 by Shenzhen
Airlines, Lufthansa Cargo and DEG, has proved to be a fierce
competitor for China Southern in south China's market for air cargo
transport.
China Southern and Air France-KLM have already had cooperation
in passenger and cargo services, connecting their major hubs in
Europe and China, according to a joint statement from the two
companies.
China Southern has 300 passenger and cargo aircraft and operates
more than 600 domestic and international routes, with Guangzhou and
Beijing as its hubs.
The company carried 49.21 million passengers in 2006, making it
the only carrier on the Chinese mainland among the world's top 10
passenger transport airlines, according to the company website.
(Xinhua News Agency July 1, 2007)