China Southern spins off cargo unit

China Southern Airlines has spun off its cargo unit into a separate company. The new, fully owned subsidiary was set up on Dec. 24 and has a registered capital of 1 billion yuan (US$142.9 million).

The move is in line with China’s national policy of reforming its large state-owned enterprises. China Southern said during Cargo Facts Asia earlier this year that it was already in the process of setting up its cargo business as a standalone unit.

China Southern’s freighter fleet currently consists of two 747-400Fs and twelve 777Fs. Two more 777Fs are due to be added in 2020, after the carrier converted an existing 777-300ER order. However, with an independent cargo division, top-up orders for additional freighters wouldn’t be surprising.

China Southern is the last of the country’s three major airlines to complete the offloading of its cargo business. In February 2017, China Eastern Airlines transferred full ownership of Eastern Air Logistics (EAL) to a separate subsidiary within the same group. Then, in June 2017, the holding company announced that it would lower its stake in EAL to 45%, leaving four private investors to hold a total of 45% and allowing core staff to hold the remaining 10%. EAL is the parent of China Cargo Airlines, which also manages the belly capacity of China Eastern’s passenger fleet.

In December 2018, Air China also disposed of its 51% stake in Air China Cargo to Capital Holding, a wholly owned subsidiary of China National Aviation Holding Corp. Ltd., which is the controlling shareholder of Air China.

Looking ahead, next year could see China Southern partially transferring ownership of China Southern Airlines Cargo to other private investors as part of China’s push to implement mixed-ownership reform.

Join us Feb. 3-5 for Cargo Facts EMEA 2020, the event serving as an international platform providing attendees with a direct connection to leading EMEA innovation executives. To register and for more information about the event, visit www.cargofactsemea.com.

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