Korean Air, Sinotrans to establish Chinese air cargo carrier

Korean Air, Sinotrans to establish Chinese air cargo carrier

   Korean Air and China’s state-owned Sinotrans Air Transportation Development (Sinoair), along with two Korean investment companies, Tuesday signed a 30-year agreement to establish a Chinese air cargo joint venture, pending approval from China’s Ministry of Commerce.

   International Air Cargo Transportation Co. is expected to start operations during the second half of 2007 with three freighters providing domestic Chinese and international air freight transportation and related services.

   The total registered capital of the joint venture will be $65 million, with Sinoair contributing $33.15 million for a 51 percent majority share and Korean Air giving $16.25 million for 25 percent. Hana Capital will invest $8.45 million for 13 percent and Shinhan Capital $7.15 million for 11 percent.

   “The International Air Cargo Transportation Co. can improve Sinoair’s competitive power in the express and air freight forwarding market by lowering operating cost and expanding market share,” said Sinoair, one of 16 subsidiaries of China’s largest forwarding group, Sinotrans Ltd.

   “China’s logistics market is the fastest developing market in the world, growing at a rate of nearly 30 percent each year,” Korean Air said in a statement. “China’s air freight market is also expected to continue its growth until the year 2020 with infinite potential. This contract signing is significant in that Korean Air has secured a firm foundation for long-term growth through the establishment of this joint venture.”

   The proposed board of directors of International Air Cargo Transportation Co. includes four members to be nominated by Sinoair and three members from Korean Air, two of which will cover the roles of chief executive officer and chief financial officer.