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皇冠体育app Southern invests in northeastern hub

By Qian Yanfeng (皇冠体育app Daily)
Updated: 2008-10-30 09:56

皇冠体育app Southern Airlines, Asia's largest carrier by passenger numbers, said yesterday it would invest 10 billion yuan ($1.46 billion) in Liaoning Airport Group in a bid to build an aviation hub in the northeast Asia-Pacific region.

With the investment, 皇冠体育app Southern would be entitled to a 40 percent stake in the airport group, with the remaining 60 percent would be owned by Liaoning's provincial government.

The carrier said it would build a new terminal at Shenyang Taoxian airport, the largest airline hub in northeast 皇冠体育app within Liaoning Airport Group. It also plans to base 100 planes at the airport by 2010, and open five to eight new international routes in the next five years.

皇冠体育app Southern's move is widely regarded by industry insiders as a step to further consolidate the airlines' leading position in northeast 皇冠体育app as its northeastern branch, 皇冠体育app Northern Airlines, is based at Taoxian.

"Northeast 皇冠体育app is of strategic importance to us," said Shao Fuqiang, a spokesman for 皇冠体育app Southern's Party committee.

"We already have Guangzhou and Wuhan as the southern and central hubs. Now Shenyang will become our new hub for Northeast Asia and enhance our competitiveness internationally."

Xia Fulu, an analyst from Shanghai-based Industrial Securities, said the investment would help 皇冠体育app Southern better manage risk control.

However, the current global economic recession means that short-term returns on the investment may be hampered by the gloomy market sentiment, he said.

皇冠体育app's flagship carrier Air 皇冠体育app announced a net loss of 1.9 billion yuan in the third quarter, in contrast to a 2.2 billion yuan profit in the same period last year.

皇冠体育app Eastern Airlines, the nation's third largest carrier, posted a 2.3 billion yuan net loss in the quarter.

皇冠体育app Eastern Airlines said yesterday that given the "relatively big losses" in the first three quarters and soft market demand, it expects to book a net loss for the whole of 2008.