HNA Group, China's fourth largest airline group, yesterday launched a new carrier, Grand China Air, to consolidate its businesses.

The new airline's maiden flight leaves Beijing for Dalian today. The carrier is expected to be a new platform for HNA to raise funds for further expansion.

The company, registered in Haikou, Hainan Province, is based at Beijing Capital International Airport and will operate trunk-line services and international flights from the capital city.

"HNA will try to become a leading, modern airline group, with Grand China Air as the core," said Chen Feng, HNA's chairman.

HNA is expected to inject the assets of Hainan Airlines and its three subsidiaries - Xinhua Airlines, Chang'an Airlines and Shanxi Airlines - into the new carrier, industry insiders said.

Grand China Air is planning to go public to fund its fleet and network expansion and Hong Kong is "a possible destination" for the listing, said Zhu Yimin, the new carrier's president.

"Grand China Air will be a platform for HNA to consolidate its airline business and building a base in Beijing will help transform it into an international airline group," said Li Lei, an aviation analyst with CITIC China Securities.

HNA began on China's southernmost island province of Hainan, which, Li said, would limit its further growth.

Grand China Air is 48.61 percent-owned by the Hainan provincial government, with US financier George Soros holding 18.64 percent. HNA and other investors own the remaining shares.

But analysts said the new airline would face huge challenges competing head-to-head with China's three largest airline groups in Beijing.

HNA currently operates 140 jets and 3,000 weekly flights. Apart from trunk-line services, its subsidiaries include business charter, feeder-line, low-cost flights and cargo transport.

(China Daily November 30, 2007)