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Taiwan's China Airlines leases Boeing 747-400 indirectly to China JV - source

31-Jul-2007

Taipei (XFN-ASIA) - Taiwan's China Airlines Co Ltd (2610.TW)

has leased a Boeing 747-400 freighter indirectly to its China joint venture,

Yangtze River Express Airlines Co Ltd, a source close to the Taiwanese airline

said.

The source said the Boeing 747-400 was first leased to China Airline's wholly-owned subsidiary, Freighter Dynasty Co in Ireland, which then sub-leased the aircraft to Yangtze River Express.

However, the ownership of the freighter, which has since been registered in the US, remains with China Airlines, the source said.

"The freighter will serve Yangtze River Express' routes to Europe and US from August 1," the source said.

"China Airlines can benefit from the lease income derived from such an arrangement, as well as from better competitiveness in air cargo transportation due to lower costs," he said.

China Airlines' indirect lease of the freighter to the mainland China joint venture had earlier secured approval from the Mainland Affairs Council, which sets Taipei's policy towards Beijing.

"It is the first such lease by China Airlines to a China entity. The performance of the freighter will decide whether any further such aircraft lease arrangement will be made with the China joint venture," the source said.

However, such indirect lease arrangement will no longer be necessary when direct cross-strait air links are allowed, he added.

Beijing and Taipei currently allow non-stop passenger charter flights that fly over Hong Kong airspace.

China Airlines now owns 25 pct of Yangtze River Express, the source added.


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