China Southern Airlines Halts Logistics Spin-Off Plan

China Southern Airlines has decided to halt the spin-off and listing of its subsidiary, China Southern Air Logistics, on the Shanghai Stock Exchange (SSE), citing unfavorable market conditions.

The decision, announced recently, follows a thorough evaluation of the current economic climate.

Despite the withdrawal, China Southern Airlines assured investors that this move would not affect the company’s operations, financial stability, or long-term strategic plans.

“The withdrawal of the listing application on the SSE will not have a material impact on the company or China Southern Air Logistics, nor will it affect the implementation of the company’s future strategic plans,” the airline stated.

Initial Plan

The initial plan to spin off China Southern Air Logistics was confirmed in March 2023 as part of a strategy to unlock value and strengthen its cargo division. However, economic uncertainty and fluctuating market conditions led to a reconsideration of the plan.

China Southern Airlines has faced challenges, including record losses in 2022 due to China’s strict zero-Covid policy, which disrupted flight operations. Although the airline has since regained some momentum, the decision to withdraw the logistics subsidiary’s listing reflects ongoing volatility in China’s financial markets.

The company explained that the current market environment necessitates a coordinated arrangement of capital operation planning.

“After full communication and prudent demonstration, China Southern Logistics intends to withdraw its application documents for listing on the Shanghai Stock Exchange,” the airline pointed out.

The decision also highlights regulatory challenges, as China Southern Airlines did not meet the continuous profitability requirements outlined in the “Rules for the Spin-off of Listed Companies (Trial).” The airline reported net losses of 32.682 billion yuan and 4.209 billion yuan in 2022 and 2023, respectively.

Despite these setbacks, China Southern Airlines remains committed to its strategic goals and may explore alternative paths for listing China Southern Air Logistics in the future.