Airline adds cargo to fleet

By Winny Wang  |   2008-6-7  |     NEWSPAPER EDITION

CHINA Southern Airlines will enter the competitive cargo market and expand its fleet size after its passenger volume was ranked fourth largest among the world's carriers.

The Guangzhou-based carrier has signed a framework agreement with Air Bleu Ltd, a unit of Air France-KLM Group, to set up a cargo joint venture later this year.

China Southern, the country's largest airline by network, will hold 75 percent of the venture and Air Bleu will take the balance, but registered capital and investments won't be settled until the two sides map out a business plan.

The new venture will be engaged in domestic and overseas air cargo transport and storage, including cargo and mail services, ground handling services and warehouses operation.

"The venture can bring China Southern's advantages in network into full play and it is a milestone for us in enhancing our strength and competitiveness," said Liu Shaoyong, China Southern's chairman.

The carrier's network links 841 destinations in 162 countries and regions in the world. It delivered 56.52 million passengers last year, the fourth-largest passenger volume in the world and the top in Asia, according to the International Air Transport Association.

Meanwhile, Xiamen Airlines, China Southern's unit, plans to receive 20 Boeing 737 jets, priced at US$1.5 billion, between April 2014 and October 2015.

The introduction of the aircraft will enhance China Southern's capacity, which has grown 49 percent since the end of 2006 after purchasing 100 Boeing 737 jets, 20 A320 jets and 10 A330 jets.

China Southern also plans to issue no more than 1.5 billion yuan of medium-term notes to institutional investors of the interbank bond market to increase its operation capital, the company said.