China Southern Airlines, the country's biggest airline by fleet size, said its directors approved the appointment of Si Xian Min as board chairman at an extraordinary meeting on Monday.

The airline's directors also approved at the meeting Si's resignation as general manager, the company said in statement released through the Hong Kong exchange.

China Southern's former chairman Liu Shaoyang resigned last month after he was selected by the central government to serve as chairman of rival China Eastern Airlines, two sources familiar with the situation said.

The sources were confirming a report by the online edition of major Chinese financial magazine Caijing that the management reshuffle was part of preparations for a possible takeover of smaller Shanghai Airlines by China Eastern.

Shares in China Southern closed down 6.7 percent at HKD$1.25 on Monday.

China Eastern slid 7.1 percent to HKD$1.04 after the airline said it would report a large loss for 2008 because of slumping traffic and losses on fuel price hedging contracts.