AIR China is expected to start its privatisation process this winter as it gears up to join a global alliance.
Accountants Deloitte Touche are studying the airline’s business before proposals for a sell-off are put to its owners, the Chinese government.
Beijing has already starting the process of selling off Chinese carriers with the 30% sale of stakes in international carriers China Eastern and China Southern.
Air China UK market development manager Richard Burgess said Deloitte had been looking at Air China for two years, but had so far not advised a sale following continued financial losses.
This pattern is due to change next year as Air China is expected to make a modest profit.
“We predict a loss of around $10m in 1999 but a small profit in 2000,” said Burgess.
An option for the Air China sale is for a partner carrier to take a stake in the airline to help it run more efficiently.
Northwest Airlines would be the likely candidate as it has a strong alliance with the national carrier on transPacific routes. These include Beijing flights to San Francisco and New York.
However, Burgess said Air China hasn’t got any agreements with Northwest’s global partner KLM and this could influence which partner takes a stake and therefore an entry into an existing alliance.
Burgess said Lufthansa, and the Star Alliance, was also a possible worldwide partner as Air China has an agreement with the German airline to feed UK passengers into Frankfurt for connecting flights to Beijing.
None of the Chinese carriers belong to any of the emerging global alliances, but the possibility of tapping into 1.2bn potential passengers is too much to ignore and carriers are talking to the major Chinese airlines.
Part of Air China’s privatisation is also expected to see rationalisation in the Chinese aviation market, where there are 30 international and domestic carriers.