CNAC suggested setting up a joint venture to integrate the cargo business of the two state-owned airlines to sharpen their competitive edge. It also suggested the two conduct wide-ranging cooperation, including code-sharing, air routes optimization, maintenance and ground services.

The investment of no less than 14.9 billion H.K. dollars in cash would reduce CEA's assets-liabilities ratio to 77 percent from 94.3 percent and save it 776 million yuan in debt interest annually, it said in the proposal.

The cooperation would bring the two five billion yuan (699 million U.S. dollars) in returns annually, including four billion yuan in revenue growth and one billion yuan in cost reduction, CNAC said.

The alliance would help them grasp a larger market share of international flights to and from Beijing and Shanghai and boost the competitiveness of their internationally weak cargo business, CNAC stated.

(Xinhua News Agency March 3, 2008)