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Air China and United Airlines Reach Business Alliance

United Airlines Co., Ltd. teamed up with Air China, China's largest international carrier, to form a marketing alliance yesterday, which aims to offer passengers of both airlines more destinations in their respective countries.

The United States-based carrier, the world's second-largest airline, announced its strategic partnership with Air China, one of China's three major air groups, to cooperate in code-sharing and frequent flyer programs.

Alliances help airlines increase their networks through connections and code shares, giving both of them access to more customers because each partner can sell tickets to additional destinations.

"Code share will serve as the first of the strategic relationship between us, which will lead to further cooperation and I believe we'll explore more areas to jointly offer passengers better service," Glenn T. Tilton, chairman, president and CEO of United Airlines, said at a news briefing in Beijing.

The code-sharing agreement between troubled United Airlines, which filed the largest bankruptcy in aviation history last December, and China's flagship carrier will take effect on October 31.

Under the plan, the two will offer passengers flying between the two countries a total of 26 weekly flights.

United Airlines, which currently operates 14 weekly flights bound for either Shanghai or Beijing, will be able to provide its passengers service to five more major Chinese cities including Guangzhou, Xi'an and Shenzhen.

Meanwhile, passengers of Air China will be able to reach 14 more US destinations. This includes Atlanta, Boston and Chicago. At present, the nation's flagship carrier serves three US routes, linking China with Los Angeles, San Francisco and New York.

Code sharing alliances, widely adopted among airlines worldwide, requires no additional aircraft.

Also, the frequent flyer programs of the two airline companies will be valid on each other's flights.

Meanwhile, Air China executives said that their plan of an initial public offering may be delayed due to the SARS outbreak earlier this year.

"We've always been preparing for going public and we have already made profits during the past two years. But SARS brought us a great loss during the first half," said Li Jiaxiang, president of Air China. "We hope the government will consider the SARS outbreak as a special occurrence."

Heavily hurt by the epidemic disease, the monthly operations of the Beijing-based carrier returned to black in July after losing money for several months. Business in August is growing more rapidly, said Li. But he said he could not predict the year's total profit result.

To relieve its financial burdens, Air China plans to sell corporate bonds within the year, according to company officials.

"We've completed the preparation for issuing bonds and now we're waiting for government approval," according to Cai Jianjiang, Air China's vice senior president.

(eastday.com August 29, 2003)


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