Air China, China Southern Dismiss Report Of Merger

Air China and China Southern Airlines dismissed a media report of a possible merger of the two state-owned carriers.

Shanghai Securities News, owned by the official Xinhua News Agency, had reported that both airlines were likely to join forces, citing market talk, as Beijing moves to consolidate state-run conglomerates to improve competitiveness.

But Air China, the country's biggest airline by market value, and China Southern, the largest by fleet size, each said in separate filings on the Hong Kong and Shanghai stock exchanges that they had no knowledge of such plans.

Air China said: "Upon inquiry with China National Aviation Holding Company, the controlling shareholder of the company, neither the company nor its controlling shareholder has ever received any information, written or verbal, from any government authority concerning the above mentioned reports."

The Civil Aviation Administration of China, the country's aviation regulator, also said it had no knowledge of such a merger.

"We know nothing about it. There had been some market talk on the merger of the cargo business of state carriers earlier, and now comes talk about a merger of Air China and China Southern," a China Southern executive said.

Shares of Air China and China Southern surged 10 percent in the afternoon session, their daily upper limits, closing at 9.46 yuan and 8.97 yuan, respectively.

The government has said it wants to develop innovative, globally competitive conglomerates, capable of exporting Chinese know-how and high-end manufacturing.

Restructuring of central government-controlled industrial conglomerates is handled directly by the State-owned Assets Supervision and Administration Commission.

So far this year, SASAC has overseen the merger of the two biggest nuclear power firms and the top two train makers.