CAAC denies Chinese cargo carrier merger remarks

The Civil Aviation Authority of China has denied remarks attributed to it that suggest the country’s leading air cargo carriers are set to merge.
Yesterday, news agency Reuters carried reports suggesting that China’s Civil Aviation Administration deputy director Zhou Laizhen had said that Air China Cargo, China Cargo Airlines and China Southern Cargo were exploring merger options.
The Reuters article was based on information from government news agency Xinhua.
However, the CAAC has since denied that its deputy director made these statements, telling local reporters that the organisation had no control over the merger of state-owned enterprises.
That responsibility would fall to the State-owned Assets Supervision and Administration Commission, a spokeswoman said.
Rumours over the merger of state run businesses are commonplace. For instance, there has been speculation for years that the country would like to merge its shipping businesses but it has never actually been able to push the plans through.
However, the weakening of Chinese export growth has led some to suggest that the country is looking to re-organise its businesses.
In a research note, analysts from investment bank Jefferies said: “The aviation industry consolidation focuses on air cargo rather than the passenger business.
“We believe the Chinese government is aiming to raise the international competitiveness of Chinese companies in fragmented industries such as shipping, rather than creating domestic oligopolies and monopolies.”
The news of the potential merger led another analyst, Zacks, to speculate which company stood to benefit the most if the airlines were to merge.
“This merger among the country’s largest airline cargo operators will create Asia’s biggest freight transport company,” it said.
“The company to gain most from this decision will be China Eastern since its cargo performance is the most disappointing of the three."

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