GRAND China Airlines may take its unit Hainan Airlines Co. private before floating its own shares in Hong Kong next year, the Caijing magazine said yesterday (July 10).

Grand China Air, which replaced billionaire George Soros as the biggest shareholder in Hainan Airlines via a private share placement in June, is considering buying out the publicly traded shares of the unit, the Beijing-based magazine said, citing unidentified sources.

The firm now controls 53.67 percent of Hainan Airlines, the country's fourth-largest airline by fleet size. After a buyout, Grand China would seek a listing in Hong Kong, hopefully in the second half of 2007, the magazine said.

Hainan Airlines, which operates 95 planes, is mainly a domestic carrier but also flies to foreign destinations including Bangkok, Kuala Lumpur, Osaka and Budapest.

It raised US$700 million in a share sale last month as it plans a major fleet expansion to compete with the country's big three airlines - Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co.

Hainan Airlines' chairman, Chen Feng, said last year the carrier wanted to double its fleet to 200 aircraft by 2010 and would expand partly by merging with three smaller rivals.

Editor: Wing