The chairman and president of China Eastern Airlines, one of several major state-owned carriers, have been replaced as part of a shake-up of the troubled industry.

Liu Shaoyong, chairman of rival China Southern Airlines, was appointed to replace Shanghai-based China Eastern's chairman Li Fenghua, the carrier said in a statement to the Hong Kong Stock Exchange.

Ma Xulun, deputy general manager of China National Aviation Holding Co., the state-owned parent of flag-carrier Air China, was named president of China Eastern, replacing Cao Jianxiong, it said.

The announcement characterized the appointments as a "reallocation of appointment," however the moves are widely seen as part of an industry shake-up.

In a separate announcement, China Southern said Liu had resigned as chairman. It appointed another company director, Li Wenxin, to be acting chairman until Liu's replacement is named.

a deal to sell a strategic stake to Singapore Airlines and Singaporean government investment arm Temasek Holdings fall through. A competing plan to sell shares to China National Aviation Holdings also failed.

More recently, the airline was the subject of speculation that it might combine with local rival Shanghai Airlines, but China Eastern denied that. The management reshuffle is expected to facilitate a merger with Shanghai Airlines, the financial magazine Caijing and other media reports said.

China Southern and China Eastern each are in the midst of receiving 3 billion yuan (US$440 million) capital injections from the government, intended to tide them through financial crises.

Both airlines have been hammered by swings in currency values and oil prices, amid weakening passenger and freight demand.

State-owned carriers tallied losses of 4.2 billion yuan (US$613 million) in January-October. Earlier this week, the government urged the airlines to cancel or defer aircraft deliveries until business recovers.

(China Daily December 15, 2008)