China's revamped airlines ready for takeoff .

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China's revamped airlines ready for takeoff :

BEIJING, Oct 9 (Reuters) - China will formally launch three revamped airline giants this week in the industry's biggest step yet towards global competitiveness, officials and state media said on Wednesday.

China has long planned to set up a trio of giants by grouping nine airlines under flag carrier Air China, China Eastern (0670)(600115)(CEA) and China Southern (1055)(ZNH).

Industry experts had speculated that two recent fatal Chinese air crashes had stalled a consolidation begun last year with the three dominant aviation groups expected to emerge by the end of June.

A China Northern jet crash in May and an Air China crash in April killed 240 people, sparking concerns the industry revamp might be put off.

But the new groups would be launched formally at a ceremony in Beijing's Great Hall of the People on Friday, a spokesman for Civil Aviation Administration of China, the industry regulator, told Reuters.

Spokesmen for the three main airlines confirmed the plan.

SERVICES, TOO

In addition, an aviation services group would be formed with three units handling fuel, information and materials, the semi-official China News Service said.

Earlier plans had called for three separate service companies to be set up.

No financial details of the reorganisations have been revealed, but airline executives have said the plan could include asset reshuffling, debt restructuring and job cuts.

In July, the State Council, China's cabinet, approved Air China's merger plans and state media said then the details of forming the China Eastern and China Southern groups had been submitted for government approval.

Under a blueprint unveiled early this year, China Eastern would take over debt-ridden China Northwest Air and small but profitable Yunnan Air.

China Southern is to merge with China Northern Airlines and Xinjiang Airlines.

"Air China will be the main subsidiary of the group and continue to use its own logo and name, while the two other firms will adopt the Air China colours and logo," a company spokesman said.

Air China President Wang Kaiyuan will be president of the group, the spokesman said.

LISTINGS AHEAD?

Last month, Air China set up a new group to prepare for a stock listing in Hong Kong that could raise billions of dollars. Officials have said a listing is not planned in the near future.

The company was exploring a step-by-step plan that would list one unit first and inject other assets into it down the road, officials say.

Air China has said it expects to make a profit of between 300 million and 500 million yuan ($36 million and $60 million) this year, rebounding from a net loss of 626 million yuan last year.

China Eastern, which is listed in Hong Kong and New York, said there would be no immediate impact on the firm's business.

Airline spokesman Luo Zhuping said the two carriers it is merging with would not operate under Eastern's banner until after their assets were injected into the listed firm, a process he said was likely to take another year and a half.

"The formal launch only needs the approval of regulators. But injections into the listed company will be made according to international practice," Luo said.

Concrete details on the injection, such as whether the listed company would pay for the assets in cash or shares, were being discussed, he said.

"We don't have many overlapping routes, so we're still operating separately," Luo said.
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