China Southern Airlines Announces Merger Movement; New Ground Handling Agreement Inked

China Southern Airlines (NYSE: ZNH) (HKSE: 1055), the largest airline in The People's Republic of China, is announcing that it has signed a new ground handling agreement with China Northern Airlines and Xinjiang Airlines - one initial step forward in the proposed merger of the three carriers into the Southern Airlines Group.

Starting immediately, China Southern Airlines and China Northern Airlines will act as each other's ground handling agent at their respective airport - Baiyun International Airport in Guangzhou and Taoxian International Airport in Shenyang.

Since the Civil Aviation of Administration of China (CAAC) announced the merger scheme last year, which confirmed China Southern Airlines' consolidation with China Northern Airlines and Xinjiang Airlines, the three carriers have jointly created a Reforming & Restructuring Management Group and some related administrative offices to formally "shepherd" the various details relating to the merger.

During numerous meetings, the three parties reached a consensus to act as each other's ground handling agent in the areas of commercial business, maintenance, catering, cabin cleaning, security, finance and flight dispatch.

In the near future, all three airlines will implement mutual ground handling agents at Urumqi International Airport and plan to gradually enlarge the ground-handling services to other Chinese airports. The three airlines also created a detailed mutual training plan on commercial business and maintenance.

When the merger of China Northern Airlines and Xinjang Airlines is completed into the Southern Airlines Group, the combined China Southern Airlines Company will not only be China's largest airline - a position it has held for more than two decades - but emerge as the second largest airline in all of Asia.