China Southern Airlines stated (24-Sep-2012) it entered a JV agreement with Henan Aviation Investment for the establishment of a JV company with registered capital of CNY6 billion (USD951.2 million). Of this, 60% will be contributed by the company in cash or in kind (CNY3.6 billion//USD570 million) and 40% shall be contributed by Henan Aviation Investment in cash (CNY2.4 billion/USD380 million). The JV will be owned with a 60:40 split between China Southern Airlines and Henan Aviation Investment, respectively. The scope of the JV includes domestic, international and regional aviation transportation of passengers and cargo. The board of directors of the JV company will comprise five directors including one chairman, one vice chairman and three directors, where China Southern will be entitled to nominate one chairman and two directors, and Henan Aviation Investment will be entitled to nominate one vice chairman and one director. The business term of the JV company is 20 years from the incorporation date, with extension possible one year prior to expiry. [more - original PR]
China Southern Airlines: "In recent years, the economy of Henan province maintained a positive development trend, and the civil aviation transportation demand achieved a steady growth. To further enhance the cooperation between the Company and Henan Aviation Investment in the aviation market of Henan province, take fully advantage of the edges of the parties and facilitate the mutual development, the Company decides to establish the JV Company with Henan Aviation Investment. The Directors consider that the establishment of the JV Company is beneficial to the Company (i) to establish a long-term positive strategic cooperation relationship with Henan province and enjoy the supporting and preferences in many aspects; (ii) to maintain market position in Henan province by improving the routes network of the Company, and strengthen our market competitiveness in Henan province by benefiting from the fast development of the economy and aviation market of Henan province; and (iii) to help the Company to raise
capital from the market to reduce the asset-liability ratio and financial cost of the Group, increase the profit capability of the Group and make a better return to the shareholders of the Company." Source: Company statement, 24-Sep-2012.