Air China may merge with other mainland airlines

Air China Ltd.<601111><753>, the most largest international airlines in China, wants to merge with other China National Aviation Companies, such as its competitor - China Southern Airlines Co. Ltd<600029><1055>, Shanghai Airlines<600591>, Shenzhen Airlines, and Hainan Airlines<600221><900945>.

President of Air China Cai Jianjiang said the merger will can help the reconstruction of the airline in a time of the drastic rivalry from foreign carriers as well as new domestic airlines.

Although the company's share price decreased 4% to HK$8.34 on Wednesday, it earned 98% this year. The percentage earnings are much larger than that of Heng Sheng Chinese Enterprises Index, which is only 29%. The share price of China Southern fell 4.23% to HK$8.61, but the profits also tripled in first half of 2007.

However, Air China made an announcement on the Hong Kong Stock Exchange this morning, saying that such news was just rumors. The management only said it did not exclude the possibility of such mergers and restructuring, but did not identify any airlines that could be involved. Additionally, the company has no plans to conduct any reorganization, M&A, or asset injection with other airline companies.