Air China considers Shanghai Airlines stake on record losses

Air China may take advantage of record industry losses and a falling market to expand its presence in Shanghai, Bloomberg reported. Air China President Cai Jianjiang has said he is interested in a stake in Shanghai Airlines, which controls 17% of air traffic out of Shanghai. Yesterday, Shanghai Airlines reported its largest-ever quarterly loss, of US$64 million, compared to a profit of US$11.3 million in the third quarter of 2007. An acquisition of Shanghai Airlines would hinge on the Shanghai government’s willingness to relinquish control of its more than 50% stake in the airline. Li Jiaxiang, China’s chief aviation regulator, has encouraged consolidation plans to create a Chinese "super carrier" to challenge foreign competitors.