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Air China Expands to Freight Logistics Businesses, Opens Up to Foreign Capital

| Apr 25, 2017 10:18 AM EDT

Air China will be opening to private and foreign investors.

China's National Aviation Holding Company (CNAHC), the state-owned parent of Air China, has been granted permission by the National Development and Reform Commission to open itself to foreign and private investors.

The Chinese government is now pushing for prioritization of reforms on its state-owned companies and will be releasing new guidelines on adding leverage for mixed ownership.

The decision from the government will let Air China expand its freight logistics business and will potentially reshuffle the climate of air cargo for China.

According to a statement by the airline, "CNAHC will start to push forward the mixed-ownership reform in air freight logistics."

In 2015, an official of the Civil Aviation Administration of China said that Air China Cargo, China Cargo Airlines and China Southern Cargo had plans of a merger. The planned partnership now will be pushing through.

The merger will also involve additional capitalization from China Unicom and China Eastern Airlines.

Air China's other subsidiaries--Air China Cargo, Shenzhen Airlines, Shandong Airlines, Air Macau, Dalian Airlines, Beijing Airlines and Ameco--will be affected by the influx of new investors.

Air China has sustained operations and saw last year a 6.6 percent growth, which amounted to a revenue of $7 billion.

Air China is the leading domestic carrier in China and the only carrier that has regular flights to North Korea. The flights to Pyongyang have not been suspended amid the tensions between the two countries.

However, some flights were rerouted due to the lack of ticket sales. The cancellation of the flights came after the announcement of China's foreign minister Wang Yi on the possibility of a conflict breaking out "at any moment."

Wang said, "Lately, tensions have risen . . . and one has the feeling that a conflict could break out at any moment. If a war occurs, the result is a situation in which everybody loses and there can be no winner."

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