China Southern Air Holding Company establishes Five New Subsidiary Companies

China Southern Airlines has formed - through its parent China Southern Air Holding Company - five new subsidiary companies which will offer new consolidated operations and marketing management.

According to Mr. Yan Zhiqing, President, China Southern Air Holding Company, the five companies specifically include:

- Tourism Development Company Limited China Southern Air Holding Company;

- Aviation Service Company Limited China Southern Air Holding Company;

- Construction and Development Company Limited China Southern Air Holding Company;

- Passenger and Cargo Service Company Limited China Southern Air Holding Company and

- Import and Export Trade Company China Southern Air Holding Company

“These five companies combine the resources and business expertise within the area of China Southern Air Holding Company (CSAH) umbrella,” said Mr. Yan.

Tourism Development Co. Ltd. CSAH – will focus on hotels and tourism; Aviation Service Company Limited CSAH – will highlight air transport related resources and services; Import and Export Trade Company CSAH – provides import & export agent services and domestic stock agent services; Construction and Development Co. Ltd. CSAH – will operate the airline’s land access, real estate, project supervision and management, property management and servicing while the Passenger and Cargo Service Company Limited CSAH – will operate airline ticketing, air cargo sales agent and express delivery.

The five companies are state owned self-investment limited companies with independent corporate qualification. After the successful conclusion of the current consolidation between China Southern Airlines with China Northern and Xinjiang Airlines last year, CSAH combined and adjusted its resources to currently establish these accessorial companies with additional sub-category companies to be established by the close of 2003.

Concurrently, CSAH is ramping up its consolidation operations with the main industrial properties of China Southern and Xinjiang Airlines to be injected into China Southern Airlines Company Limited by the end of 2003 and the CSAH consolidation will finally be completed.

All of these measures will provide a framework to the main air transport operations and strengthen the company’s core domestic and global passenger and cargo competitiveness. Separating and operating these accessorial companies will strengthen the overall group’s ability to compete on an equal footing against all International competition.

”The accessorial business of China Southern must be part in parcel with the development of the main airline business while promoting mutual benefits to build CSAH into one of the world’s leading air carriers with true global competitiveness which emphasizes air transportation and coordinate the development with accessorial business,” said Mr. Yan.

China Southern Airlines entered the Hong Kong and New York stock markets in 1997 and last July sold 1 Billion A shares on both the Shanghai and Shenzhen Exchanges. 

Several may question what the effect will be to small shareowners under the consolidation reform measures. In his response, Mr. Yan said, “the separation of the main and accessorial business and the consolidation reform will not impair the interest of the small shareowners but will strengthen their share position. We have taken their interest into consideration and the consolidation reform measures will reduce the burden of China Southern’s main air transportation business, make it more competitive and stronger and benefit both small and corporate stock shareowner.”