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Cargo airline will receive cash injection

SHANGHAI Airlines plans to increase investment in its cargo subsidiary, which is under pressure as the financial crisis has hit the air cargo business.

"The company will invest 110 million yuan (US$16 million) into Shanghai Airlines Cargo Intl Co to increase its registered capital to 664 million yuan from 464 million yuan," the country's fifth-largest carrier said in a statement to the Shanghai Stock Exchange yesterday.

Another 90 million yuan will be provided by the cargo firm's two other shareholders. The carrier will still hold 55 percent of the cargo company. The stakes of the two other shareholders will not change, the statement said.

Shanghai Airlines Cargo lost 263 million yuan last year, leading to a loss of 145 million yuan for its controlling shareholder.

"The injection is to support the loss-making subsidiary while it gets back on its feet during the bad times, however Shanghai Airlines itself is also struggling to survive," said Li Lei, an analyst at China Securities Co.

Shanghai Airlines stock was suspended from trading on Monday during merger talks with China Eastern Airlines, another Shanghai-based carrier. Xu Junmin, board secretary of the carrier, said the cash injection has no relation to the merger.


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