Air China’s stake in the Shenzhen-based carrier, Shenzhen Air, will rise to 51% from 25% following a $100 million capital injection. City-controlled Shenzhen International Holdings will also invest and raise its stake to 25%, according to the filing. Shenzhen, at this writing, will still fly as an independent-badged carrier.
A majority stake in Shenzhen Air, China’s fifth-biggest carrier, will allow Air China to challenge Guangzhou-based China Southern Airlines in the Pearl River Delta, China’s manufacturing hub.
Beijing-based Air China, which failed in a bid to buy Shenzhen Air in 2005, took management control of the carrier in December after police began a probe of the smaller airline’s top executive and largest shareholder, Li Zeyuan.
BusinessWeek reported that Li Lei, an analyst at China Securities in Beijing, said, “This is definitely a good move for Air China. The carrier has now built up a balanced network all over the country.”
The carrier also has a 30% stake in Cathay Pacific Airways and an 81% stake in Air Macau.