The restructuring is proposed to help the debt-plagued airline industry become more profitable.

The three groups would be Air China, China Eastern Airlines and China Southern Airlines, and each of them would have assets worth at least 50 billion yuan (US$6 billion).

Beijing-based Air China would combine with Chengdu-based China Southwest Airlines and Beijing's China National Aviation Corporation, which hold major shares of Hong Kong Dragonair and Air Macau. The new group would have assets of 56.1 billion yuan (US$6.8 billion), 118 planes, 20,325 employees and 339 domestic and international flight courses.

Shanghai-based China Eastern Airlines would merge with China Northwest Airlines and the profitable Yunnan Airlines, a group that would boast total assets of 47.3 billion yuan (US$5.7 billion). It would have 118 planes, 25,109 employees and 437 domestic and international air routes.

Guangzhou-based China Southern Airlines would combine with China Northern Airlines and Xinjiang Airlines, and their combined assets are expected to reach 50.1 billion yuan (US$6 billion). The group would have the most flight courses with 606 routes, including 512 domestic flights and 94 international flights. It would have 180 planes and 34,089 employees.

Beside the 10 airlines, four CAAC-controlled aviation service companies also would be merged.

The Computer Information Centre and Counting Center under CAAC would be merged into a joint aviation information service centre with total assets of about 5.3 billion yuan (US$640 million).

The China Aviation Oil Corp and Aviation Supplies Import and Export Corp would be combined into a supply center. It is expected to have 10.6 billion yuan (US$.1.2 billion) in assets.

"CAAC will axe any economic relations with those companies once the regrouping is done, and we will transfer our work to making industry-wide policies in the future," said Liu Jianfeng, minister of CAAC, Friday in Beijing.

He said this regroup was being orchestrated at the airlines' requests and that CAAC just gave them some advice during merger negotiations.

Liu said CAAC hoped the reorganization would help China's aviation industry become profitable.

"These policies, including ticket price control, aircraft import and new air route authorizations, will be changed to respond to China's growing market-based economy, " said Liu, adding that administrative orders or barriers will be greatly reduced.

He indicated that the merging process won't be finished for a while, and precise dates were unavailable.

"Those airlines have many issues to settle before it's over, so we have not set a timetable for the process," Liu said.

China now has 34 airlines operating about 520 planes. The airlines carried about 67 million passengers last year.

(China Daily 04/28/2001)