The final phase of a state-backed consolidation exercise involving the takeover of two smaller carriers by China Southern Airlines is nearly complete, with the major airline agreeing to acquire 16.9 billion yuan ($2 billion) worth of assets from its parent.

Guangzhou-based China Southern will acquire the assets of China Northern Airlines and Xinjiang Airlines. The deal will increase China Southern's fleet by more 50% to 214 aircraft.

Shenyang-based China Northern and Urumqi-based Xinjiang are wholly owned by CSAHC, while China Southern is 50.3%-owned by CSAHC. CSAHC acquired the smaller carriers in 2002 in line with government efforts to consolidate the crowded airline sector in China, and China Northern and Xinjiang now operate all their services under the China Southern flight code.

China Southern has long planned to take over the airlines. It has agreed to acquire their aircraft and other assets worth 16.9 billion yuan, largely by assuming debts of 15 billion yuan.

Source: Flight International