NICHOLAS IONIDES ZHUHAI Chinese consolidation efforts are continuing to gather pace, with China Southern Airlines closing on a deal to acquire China Xinjiang Airlines.

If finalised, the take-over will be the biggest since Civil Aviation Administration of China (CAAC) officials announced radical consolidation plans in the middle of last year.

Industry sources in Hong Kong say that China Southern, the country's largest carrier, is finalising a deal to acquire the smaller operator, based in Urumqi, a city in China's far north west. It is controlled by the CAAC and the government of Xinjiang province.

The speculation about a take-over began in November when China Southern announced that China Xinjiang vice-president, Wang Chang Shun, had been appointed as its own new president. Wang replaced Yan Zhi Qing, who was moved up to president of China Southern's parent company, Southern Airlines Group (SA Group).

The China Xinjiang take-over will be China Southern's second since the government's consolidation plans were tabled. In August, SA Group acquired the small Zhongyuan Airlines based in the central city of Zhengzhou.

Airlines have been scrambling to find partners since July, when the CAAC said that the 10 carriers under the regulator's direct control would be merged into three mammoth groups led by Air China from its base in Beijing, China Eastern based in Shanghai and China Southern in Guangzhou.

The seven other carriers directly controlled by the CAAC are: China Northern, China Northwest, China Southwest, China Xinjiang, CNAC-Zhejiang, Great Wall and Yunnan Airlines.

SA Group's acquisition of Zhongyuan was the first deal following the CAAC's announcement. China Eastern has since outlined plans to buy Great Wall, while Hainan is taking over Changan Airlines.

Shandong is working to acquire Shanxi Airlines, and has also held talks to merge with China Northwest. At the same time there have been reports that China Northern may be acquired by the larger China Southern.

China Xinjiang started in 1985, and links the west of the country with major domestic and some international cities using a fleet of 21 aircraft, including six Boeing 757s, two 737-300s, three Ilyushin Il-86s and five ATR-72s.

Source: Airline Business