=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2002/10/11/f= inancial1543EDT0211.DTL ---------------------------------------------------------------------- Friday, October 11, 2002 (AP) Chinese airlines announce series of mergers aimed at eventual share issue b= y flagship carrier ELAINE KURTENBACH, AP Business Writer (10-11) 12:43 PDT HONG KONG (AP) -- China's biggest airlines announced a series of mergers Friday that lay t= he groundwork for Air China, the country's flagship international carrier, to list shares on overseas stock markets. The mergers of nine airlines into three -- Air China, China Southern Airlines and China Eastern Airlines -- are part of a state-ordered consolidation of the industry intended to create several big, world-class carriers. Together, the airlines will hold 80 percent of the market after the restructuring and control most international routes. Air China said it is merging with China Southwest Airlines and China National Aviation Corp. into a new holding company called China National Aviation Holding Co. that will have assets of 57.3 billion yuan ($6.94 billion) and 22,000 employees. The merged companies, operating under the Air China brand, together own 118 aircraft serving 307 routes. They carried 15.6 million passengers in 2001 and had revenues totaling 23.9 billion yuan ($2.89 billion), Air China said on its Web site. China National Aviation controls Zhejiang Airlines, based in the eastern province of Zhejiang. Through its Hong Kong-listed unit China National Aviation Co., it also owns 43 percent of Hong Kong's second-largest airline, Hong Kong Dragon Airlines Ltd., known as Dragonair. The merger would thus give Air China a stronger presence in the commercially vital regions of Hong Kong-Guangdong, to the south, and in the Yangtze River Delta, near Shanghai. It would also gain routes to Yunnan, Tibet and other southwestern regions. Air China said it plans to expand its fleet to more than 200 aircraft between 2005 and 2010 and to eventually raise funds on overseas stock markets -- China National Aviation Co.'s status as a publicly listed company would facilitate a listing. China Southern Airlines Co., the mainland's largest airline, will merge with China Northern and Xinjiang Airlines, which hold routes in the north and northwest. The New York- and Hong Kong-listed company, based in Guangdong's capital, will have assets totaling 50.1 billion yuan ($6.06 billion) and have a fleet of 180 aircraft, according to a report in the Beijing-backed Hong Kong newspaper Ta Kong Pao. China Eastern Airlines, which is also listed on the New York Stock Exchange, is to merge with Yunnan Airlines and China Northwest Airlines and will have a total 47.3 billion yuan ($5.73 billion) in assets, the report said. Apart from the three major carriers, three other major aviation industry groups were announced: China Travelsky Holding Co.; China Aviation Oil Holding Co. and China Aviation Supplies Import and Export Group Corp., state media reported. Chinese carriers expanded rapidly after the breakup of the monopoly carrier CAAC in the early 1980s, but increased capacity led to losses when a slowing economy cut into air travel. Rising fuel prices and steep fare discounts have driven them further into the red. Smaller regional airlines have also been joining up to boost their competitiveness vis a vis the industry giants. On the Net: Air China: www.airchina.com.cn China Southern Airlines: www.cs-air.com/en/ China Eastern Airlines: www.ce-air.com/cea/en_US/homepage =20 ---------------------------------------------------------------------- Copyright 2002 AP