China Southern Cargo gains AOC

China Southern Cargo has received its AOC as the parent group spins off its freighter operating business.

The new C hina Southern Cargo business received its AOC from the Civil Aviation Administration of Central South China earlier this month, the carrier said via its official Weibo account.

The new division will be based in Guangzhou and will be wholly owned by China Southern and documents seen last year show the cargo business will have a registered capital of C¥1bn ($150m).

It will operate Boeing 777 freighters on domestic and international cargo flights. According to its latest annual report, China Southern operates 14 777Fs and two 747-400Fs.

In its initial filing, China Southern stated that it will hand over its existing cargo slots to the new subsidiary.

China Southern also stated that the head of its Shantou division, Zhang Wei, would head the new carrier and that it will move about 30 flight crew to the cargo airline.

The move comes as China looks to reform state-owned businesses through a mixed-ownership model, with the state a shareholder in companies without running them on a day-to-day basis.

China Southern is not the only Chinese airline to have adjusted is cargo business over the past few years as part of the government reforms.

In September 2018, Air China announced it would sell its 51% stake in Air China Cargo to sister unit Capital Holding.

And in 2017, China Eastern Air Holding (CEA Holding) sold a 50% stake in Eastern Air Logistics, which in turn owns 83% of freighter operator China Eastern, to four companies.

Over the first seven months of the year, the airline has seen its cargo volumes increase by 9.6% year on year to 860,110 tonnes.