China Southern to spin off cargo business

By Damian Brett

China Southern has offloaded its cargo business as part of the Chinese government’s mixed ownership reforms.

According to an announcement from China’s National Enterprise Credit Information Publicity System, the airline’s parent, China Southern Air Holding, set up a new cargo business with a registered capital of Y1bn to operate the airline’s freighter fleet, sell bellyhold space and control cargo terminals and international logistics operations.

The new business was established on December 24 and 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.

According to its website, China Southern currently operates a freighter fleet of two Boeing 747-400 freighters and 12 B777Fs. In March last year it announced plans to add two more production B777Fs.

Over the first 11 months of last year, China Southern saw its cargo volumes improve by 0.3% year on year to 6.9bn revenue freight tonne kms.

While this is below the rapid growth recorded at the airline since the start of the last decade, it is a decent performance in a market that declined by 3.3%.

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.

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