China Southern Airlines

China Southern Airlines Company Limited is an airline headquartered in Baiyun District, Guangzhou, Guangdong Province and is the largest airline in China. Established on 1 July 1988 following the restructuring of the CAAC Airlines that acquired and merged a number of domestic airlines, the airline became one of China's "Big Three" airlines (alongside Air China and China Eastern Airlines), the world's sixth-largest airline measured by passengers carried and Asia's largest airline in fleet size, revenue, and passengers carried. With its main hubs at Guangzhou Baiyun International Airport and Beijing Daxing International Airport, the airline operates more than 2,000 flights to more than 200 destinations daily and was a member of SkyTeam until 1 January 2019. The airline started a frequent flyer program partnership with American Airlines in March 2019. The logo of the airline consists of a kapok flower (which is also the city flower of Guangzhou) on a blue tail fin. The company slogan is ''Fly towards your dreams'' ().

The parent company of China Southern Airlines Company Limited is China Southern Air Holding Company, a state-owned enterprise that was supervised by the State-owned Assets Supervision and Administration Commission of the State Council.

History and development

Founding

In 1984, the Chinese government disclosed the decision to decentralise the CAAC. Formed in 1949, CAAC was an all-encompassing organisation responsible for civil aviation in China as it was tasked with passenger transport, resource development and survey work, air traffic control, aircraft maintenance and personnel training. The decentralisation decision would result in numerous regional airlines, with four main carriers to be responsible for the majority of international and domestic air traffic: Air China, China Southern Airlines, China Eastern Airlines and China Southwest Airlines; CAAC itself would be rationalised into a regulatory and administrative organisation.

In 1988, CAAC granted its seven regional divisions, among which was the Guangzhou Regional Administration, limited operating autonomy with the status of "associate" airlines. China Southern Airlines began flying under its own name and livery in February 1991. At this time, the aircraft operated some 160 flights a day on 100 routes using the Antonov An-24, Boeing 737 and Boeing 757, along with helicopters and agricultural aircraft. In December 1992, the airline placed a US$800-million order for six Boeing 777s and the associated spare parts and training.

The airline completed its decentralisation from CAAC when it gained independence on 10 October 1993. As such, the airline could from then on restructure itself into shareholding enterprises, independently arrange external financing and establish subsidiaries to complement its core enterprise. During the airline's early years, the carrier was the dominant domestic carrier. Together with the two major airlines of China – Air China and China Eastern – the airline handled half of passenger traffic carried by all Chinese carriers. Owing to Air China's status as the country's flag carrier, the airline is entitled to extensive international service rights, with China Eastern and China Southern's international networks confined to mainly East Asia and within Asia, respectively. Like other Chinese carriers, China Southern was subjected to CAAC's exclusive right to grant operating rights for every prospective route as well as to regulate domestic prices.

Expansion

To raise its operating standards and distance itself from mostly unprofitable second and third tiers domestic airlines, the carrier signed agreements with a number of foreign carriers regarding staff training and aircraft maintenance, with the ultimate aim of being listed on the , possibly as soon as early 1995.

Starting in the mid-1990s, China Southern sought to expand its international reach beyond Asia. In December 1995, the Chinese and US governments signed an aviation agreement that would allow the commencement of non-stop air services between the two countries. After having been granted the right to establish services to Amsterdam in early 1996, the airline started Guangzhou–Beijing–Amsterdam, its first long-haul route, in November 1996. The following year, the carrier commenced non-stop trans-Pacific services to Los Angeles, as well as services to Brisbane.

The start of European and American services coincided with the arrival of the long-range Boeing 777s, the first of which was delivered in late December 1995, as well as a general expansion and upgrade of the carrier's fleet and the associated facilities. Due to engine certification and labor relations issues, the delivery of the first Boeing 777 was more than a month behind schedule. As a result, the carrier considered, but ultimately decided against, leasing the Boeing 747-400, which would have been used to cover anticipated delays as well as to launch trans-Pacific services to the US. Nevertheless, the airline planned to double its fleet of 67 aircraft. In April 1996, the Chinese government would place an order, on China Southern's behalf, for 10 Airbus A320s; the delivery of the first aircraft, and China Southern's first Airbus, was made the following year. Guangzhou Aircraft Maintenance Engineering Company, which was jointly established with Lockheed Aircraft Services International and Hutchinson Whampoa, was carrying out expansion of its aircraft maintenance facilities in anticipation of the increase.

In order to keep pace with fast developments, China Southern raised capital from the capital market. The airline was successfully listed on the Hong Kong and New York Stock Exchanges in July 1997, raising $600–$700 million. Much of the funds raised were used to facilitate the airline's fleet expansion, repayment of debt, and investments in other capital; it followed up with domestic listing in 2003 at the Shanghai Stock Exchange. By 1997, the airline, along with its joint-venture airlines Xiamen Airlines, Shantou Airlinesm and Guangxi Airlines, was carrying some 15 million passengers per year using about 90 aircraft, operating about 270 routes among 68 destinations and almost 2,450 flights per week. The airline group's revenue totalled some US$1.4 billion with a net income of $90 million.

Mergers and acquisitions

The end of the 1990s was a period of consolidation for the Chinese airline industry. Initially, China Southern looked to acquire several smaller non-profitable domestic carriers as it sought to highlight its expansion plans in an effort to raise funds; among the deals was the purchase of 60% shares of Guizhou Airlines. Due to the weakening economy amidst the 1997 Asian financial crisis and intense competition among the some 30 Chinese carriers, in 1998, CAAC considered a comprehensive restructuring of the industry that would see the consolidation of the airlines into three or five carrier groups. At one stage, it was reported that CAAC was contemplating a forced merger of Air China and China Southern. Given the latter's dual listing in Hong Kong and New York, it was thought that such a merger would have eased Air China's path towards its own share offering. China Southern confirmed that such talks between them were occurring, although they ultimately proved fruitless. Had the merger proceeded, their combined fleets would have numbered some 250 aircraft, which would have made the resultant airline the largest in Asia.

Although there was considerable resistance to CAAC's call to rationalise the industry, in July 2000, the administrative body announced that the ten airlines under its direct management will be merged into three airline groups, revolving around Air China, China Eastern Airlines and China Southern itself. Within a month, China Southern had started absorbing Zhengzhou-based Zhongyuan Airlines, which at the time operated five Boeing 737s and two Xian Y-7 turboprops. The carrier would later merge with Shenyang-based China Northern Airlines and Urumqi-based Xinjiang Airlines

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