China’s central government is urging Air China (0573.HK, 601111.SH), China Eastern Airlines (600115.SH) and China Southern Airlines (600029.SH) to merge their cargo operations to compete with foreign carriers who dominate the market, the South China Morning Post reported, citing sources close to the matter. A senior official at China Southern said: "A preparation team has been formed recently to work out the details of the consolidation." Another source said the proposed new airline would be based in Shanghai, China’s most lucrative air cargo market. However, such a venture would cast doubts over the viability of Air China’s cargo tie up with Cathay Pacific that was announced in February but is still pending final state approval.
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