China airlines soar on reports of govt investment

Shares in Chinese airlines soared Monday on reports the country will invest at least 1.5 trillion yuan ($230 billion) in the sector over the next five years and encourage industry consolidation. Beijing will offer subsidies and tax rebates to help carriers launch more international routes and become more competitive, the Shanghai Securities News quoted the industry regulator as saying. Civil Aviation Administration of China chief Li Jiaxiang said the country would also subsidise the development of regional airports. China's aviation sector would still be in its "golden era" for the next 20 years, Li said. "We should press ahead with industry alliance and consolidation via government guidance and market operations in order to form two or three carriers with a large network and global competitiveness." Shares in China's top carriers -- Air China, China Southern Airlines and China Eastern Airlines -- rose on hopes for the investment and more mergers and acquisitions. The Shanghai-listed shares of China Southern jumped 2.7 percent to 8.49 yuan in morning trade, outperforming the benchmark Shanghai Composite Index, which dipped 0.15 percent. China Eastern Airlines rose 1.13 percent to 5.40 yuan while Air China was up 1.47 percent at 10.40 yuan. CAAC spokeswoman Zhong Ning declined to comment on the report when contacted by AFP.