China Southern postpones launch of cargo JV with AF KLM

Owing to the global economic downturn and the depression in the cargo market, China Southern Airlines has decided to postpone the launch of its cargo joint venture with Air France KLM, according to CZ Chairman Si Xianmin.

"Based on the original plan, our cargo JV with AF KLM should have been launched in the first quarter. But we have to reconsider this plan after taking the current market situation into account," Si said.

Last June, China Southern signed a framework agreement with AF KLM to launch a cargo joint venture in which it would hold 75%. AE Cargo was expected to operate 10 aircraft initially, CZ President Liu Shaoyong told ATWOnline at the time (ATWOnline, June 3, 2008).

But yesterday it was revealed that GM Tan Wangeng said during an internal discussion that both CZ and AF KLM believe that "it is not a good time to launch the cargo JV now." CZ should have taken delivery of four 777 freighters and one converted A300 by now but has decided to push back two of the 777s until year end and the remaining aircraft to 2010.

There was no indication when the joint venture might be back on the agenda. "Generally speaking, the cargo market is still quite slack and we don't think it will recover this year," Tan said.