U.S.-China airline deal

U.S.-China airline deal

BEIJING (Reuter): The Chinese government has approved the landmark purchase of 25 percent of a local airline by an American company, Xinhua news agency said yesterday.

The Civil Aviation Administration of China (CAAC), the aviation regulator, and the Ministry of Foreign Trade and Economic Cooperation, have approved the purchase by American Aviation Investment of part of Hainan Airlines, it said.

American Investment is a fund partially controlled by U.S. financier George Soros.

It becomes China's first joint venture airline, with the U.S. partner having paid US$25 million for its stake.

Set up as a local airline in October 1989, the airline was the first stockholding airline company in China and one of the most profitable, earning 44.78 million yuan ($5.4 million) in the first half of 1995, Xinhua said.

The ministry and CAAC ruled that the injection of foreign capital was legal, in line with national and local industrial policy, and would help the airline study foreign management and technology, it said.

Hainan, China's southernmost province, is the country's largest special economic zone, permitting it to make experiments that would not be allowed in other parts of the country.