China Southern, Air China Jostle for Shenzhen Carrier

Air China and China Southern Airlines are in a dogfight for the controlling stake in Shenzhen Airlines, following the arrest of its largest shareholder last month for "economic crimes," reveals the South China Morning Post.


According to the Post, China Southern could lose its dominant position in south China if Air China gets the lion's share of Shenzhen Air, the mainland's fifth-largest airline. Air China will work harder to win after failing to take control of Shenzhen Air in 2005.


But the complexities of the contest go far beyond a simple commercial acquisition, notes the Post, revealing that whoever wins the 65% stake in Shenzhen Air will need the blessings of the nation's airline regulator, the provincial government of Guangdong and the central government.


According to the Post, Shenzhen Air's majority owner Li Zeyuan was arrested last month for alleged economic crimes, reportedly for committing fraud during the airline's first tendering process in 2005. The media reports that he failed to pay in full for the stake and that about 20% of that stake remains with the Guangdong government's investment arm.


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