Industrials Author:Zhenduo Wang Nov 04, 2020 04:19 AM (GMT+8)

CAAC has approved the new cargo subsidiary of China Southern Airlines, and the new subsidiary will join the Southern Air Cargo Logistics company.

Image Credit: Carnoc.com

On November 3, 2020, the Civil Aviation Administration of China (CAAC) announced that China Southern Airlines plans to establish an independent cargo airline subsidiary and that this plan has been approved by the CAAC. The registered capital of the new company will be CNY 1 billion (CNY 400 million cash contribution and CNY 400 million real object contribution) and the new company will employ Boeing 777 freighters as their basis of service.

Nowadays, Southern Air Cargo Logistics Guangzhou, a wholly-owned subsidiary of China Southern Airlines, takes charge of the operation of China Southern Airlines' cargo and logistics business. According to the company’s roadshow, from January to August, Southern Air Cargo Logistics Guangzhou achieved revenue of CNY 9.78 billion and gained CNY 2.64 billion net profit, which helped China Southern Airlines return to profitability in Q3 2020. The new subsidiary, when established, will focus on cargo aircraft business, while the previous cargo logistics subsidiary will focus on freight station, ground transportation, warehousing management, and other logistics business.

Southern Air Cargo Logistics Guangzhou started the mixed-ownership reformation in September 2020 and planned to attract up to 15 strategic investors. It is expected that the new cargo subsidiary will join the Southern Air Cargo Logistics company. China Southern Airlines chose its cargo business to apply the mixed-ownership reformation to improve the business’s profitability without taking on an excessive burden of restructuring, since the revenue from cargo only accounts for 10% of the total.