Shenzhen Airlines’ State shareholder, Guangdong Holding Group, planned to offload its 65 percent stake in the regional carrier via a public auction scheduled for mid-May, Xinhua reported.

Guangdong Holdings had decided to sell its stake to help fund the carrier’s plan to boost its fleet to 100 aircraft from the current 27 over the next five years, Xinhua said, citing sources.

It did not indicate how the sale would help Shenzhen Airlines acquire the planes.

The auction would be held May 23, the Shenzhen Enterprise Ownership Exchange Center said on its Web site.

Five companies, including Beijing-based Air China, have expressed interest in the carrier majoritily owned by Guangdong Holding Group.

Air China is the second-largest shareholder in the airline with a 25 percent equity interest. “We have great concern toward this issue, but we haven’t yet decided whether or not to join the bid,” said Zheng Baoan, company secretary of Air China.

Hong Kong’s leading carrier, Cathay Pacific Airways, and mainland freight forwarder Sinotrans Ltd. also want a piece of Shenzhen Airlines, according to another domestic media report.

Cathay’s spokeswoman declined to comment on the report.

Shenzhen Enterprise Ownership Exchange Center said bidders must have net assets of no less than 1.5 billion yuan (US$180 million) and total assets of no less than 3 billion yuan.

Shenzhen Airlines flies to 48 destinations in China.

The airline carried 3.5 million passengers and 52,207 tons of cargo in 2003. It made an after-tax profit of over 200 million yuan in 2004, an official from Shenzhen Airlines said.

Shenzhen Airlines was one of the few Chinese carriers that managed to turn a profit during the 2003 SARS outbreak when China’s aviation industry saw passenger numbers plummet.

(Shenzhen Daily April 27, 2005)