Air China Ltd's Chairman Li Jiaxiang will replace Yang Yuanyuan as director of the China Administration of Civil Aviation, an official at the carrier has confirmed.

"The announcement may come after the New Year's holiday," said Huang Bin, board secretary of the country's largest carrier by market value.

It's still unclear who will be Li's successor at Air China and the appointment is pending approval at a shareholders' meeting, Huang said.

Well-informed sources said Kong Dong, vice chairman of the carrier, will be the new head. Li, 59, joined the Beijing-based carrier in 2000 as the Party secretary and was appointed as the chairman in 2002.

However, the appointment may impact the government-backed deal between China Eastern Airlines and Singapore Airlines as Li planned to merge major domestic airlines to build Air China into a super carrier.

"After Li takes office, the government's support for the Singapore deal will be weakened, which will affect the shareholders' decision," said Li Lei, an analyst at China Securities Co.

"The minority shareholders care about their own interests rather than the cooperation. The appointment indicates that the government is supporting Air China, so the shareholders may veto the deal at the meeting on January 8," said Xia Fulu, an analyst at Industrial Securities.

China Eastern and SIA signed a cooperation deal in November, which said the Singapore carrier will pay HK$4.7 billion (US$602 million) to buy a 16-percent stake in the Shanghai-based Chinese airline, and its parent Temasek Holdings Pte will buy an 8.3-percent stake for HK$2.5 billion at HK$3.80 a share.

(Shanghai Daily January 2, 2008)