SOUTHERN AIRLINES, ZHONGYUAN AIRLINES TO MERGE

SOUTHERN AIRLINES, ZHONGYUAN AIRLINES TO MERGE

   Southern Airlines Group Co., parent of China Southern Airlines, China's largest airline, said Thursday it will take control of Zhongyuan Airlines.

   The merger has been approved by the Civil Aviation Administration of China, which is the airline regulatory body for China's airlines. The Southern-Zhongyuan merger is the first step in the CAAC's plan to merge 10 Chinese carriers into three major airline groups.

   Zhongyuan operates five Boeing 737s and two Y-7s and has more than 560 employees, including 80 pilots. The airline will keep its operating name but will be part of the Southern Airlines Group.

   China Southern operates a fleet of 100 aircraft, including nine Boeing 777s, connecting with 80 cities worldwide.

   Once merged, the group would control 60 percent of the transportation market at Zhengzhou Airport. The airport handles flights from 40 destinations throughout China and more than 23,000 flights a year.

   In CAAC's merger plans, the three resulting airline groups would each have assets of about $6 billion. The companies are free to pick which group to join though China Southern Airlines, China Eastern Airlines and Air China will serve as the focal points of the three groups.