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With a total registered capital of USD 63.1 million, MTU Maintenance Zhuhai was jointly founded by China Southern Airlines and MTU Aero Engines GmbH, a world-known heavy-duty diesel engine manufacture in Germany, on March 20, 2001. It is embarked on, repairing, face-lifting, and maintenance of civil aircraft engines and related parts.
Besides, the 50-50 JV is designed to provide aircraft engine installation and disassembly technologies as well as the leasing services for civil airways.
Located in the southern Chinese city of Zhuhai, Guangdong Province, MTU Maintenance Zhuhai reaped net profit of CNY 202 million in the first half of this year, compared with CNY 269 million in the entire 2008, and operating revenue reached CNY 1.43 billion. By far, it had had total net assets of CNY 1.006 billion.
The seller expects to further consolidate its air passenger and cargo transportation business, on the strength of this deal. Of course, the withdrawal from its aircraft engine JV is predicted to help China Southern Airlines cut financing expenses and lower its assets-liabilities ratio in the near future.
As a matter of fact, the nation's three aviation tycoon, China Southern Airlines, Air China Limited (SHSE: 601111; SEHK: 0753), and China Eastern Airlines Co., Ltd. (SEHK: 0670; SHSE: 600115), were all confronted with such a high assets-liabilities ratio in recent years, which set a big obstruction to their development plans.
From January to June 2009, China Southern Airlines harvested net profit of only CNY 38 million, 95.3% lower than CNY 809 million in the prior year. Its assets-liabilities ratio is still as high as 89% now, in spite of the earlier capital injection, additional share offering, and governmental subsidies.
There is no possibility of reduction of the three airways' assets-liabilities ratios through the performance improvement within a short period of time, said most analysts, adding that they should rely on the governmental subsidies.
Currently, China Southern Airlines is actively applying to the Chinese government for the second round of capital injection, said the chairman, Si Xianmin. He believes that the air carrier will warm up gradually in the second half of 2009, along with the rebound of China's aviation market, because about 80% of its airlines are designed to serve domestic passengers.
(USD 1= CNY 6.83)
Source: www.cnstock.com (September 29, 2009)
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