Mexico's state-owned airline holding company, Cintra, will re-launch Aerocaribe as a low-cost carrier in May as part of its plan to sell off Aeromexico and Mexicana de Aviacion.

Chairman Andres Conesa said that Cintra's re-launch of Aerocaribe with fares up to 30 percent cheaper than those currently available would help prepare the broader airlines sell-off.

Aeromexico and Mexicana were brought under government control when they went bankrupt in the mid-1990s. Cintra decided last month to sell them separately after an initial proposal to first merge them was heavily criticized as creating an effective monopoly.

Under the new plan, Mexicana will be sold along with the new budget airline, while Aeromexico is being packaged with regional carrier Aeroliteral.

Conesa said the transformation of Aerocaribe helps the overall sell-off by offering investors two very different airline businesses.

"It differentiates Aeromexico and Mexicana," he said. "They are not that similar, but the perception is that they are very similar. If you have a very different subsidiary, it helps to differentiate the products."

It is not clear what name will be given to the re-launched Aerocaribe. As a regional carrier, it has made heavy losses but Conesa said it would be rejuvenated with new routes and a new fleet of 10 Fokker 100s.

After years of losses, Cintra turned a profit in 2004, helped by cost-cutting and Mexico's economic recovery. Conesa said he expects it to do even better this year as potential investors look at the airlines.

"The idea is to have better operating results than last year. It will be important to have them," he said.

He said Cintra will decide in May or June whether the airlines will be sold privately, through a share issue or a combination of the two.

Foreign airlines could bid for the carriers, although they are barred under Mexican law from holding more than a 25 percent stake.