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Chinese Airlines to Boost Cooperation, Regulator Says

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Nov. 4 (Bloomberg) -- Chinese airlines will likely work together more as the global economic slowdown damps travel demand, said Li Jiaxiang, head of the nation's aviation regulator.

``It's like people hugging to get warmer in winter,'' Li, director of the Civil Aviation Administration of China, told reporters today at the Zhuhai air show in southern China. ``As the regulator, I would support these kinds of moves.''

China Southern Airlines (SHA:600029)(HKG:1055)(NYSE:ZNH), Air China (SHA:601111) (HKG:0753), China Eastern Airlines (SHA:600115)(HKG:0670)(NYSE:CEA), the nation's big three carriers, today signed an agreement to cooperate on maintenance in order cut costs and delays. All three of the carriers posted third-quarter losses on higher fuel costs and slowing demand.

``The industry regulator would like to see moves that may benefit the industry,'' Li said. ``Still, it's a company decision and it should be market-oriented.''

Li declined to say if consolidation would benefit the industry. As chairman of Air China Ltd., he built up a stake in China Eastern Airlines Corp., the nation's number three airline, and laid out plans to form a Chinese ``super-carrier'' to compete internationally.


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