- The Washington Times - Wednesday, November 26, 2008

SHANGHAI, CHINA (AP) - China Southern Airlines said it will get a 3 billion yuan ($440 million) capital injection from the government, intended to tide the major carrier through a financial crisis.

The airline, which suspended its shares from trading Thursday, is one of several Chinese carriers that have been whammied by wild swings in the oil price and weakening passenger and freight demand.

China Southern Airlines will issue new shares to its state-owned controlling shareholder, China Southern Airlines Holding Co., in exchange for the infusion of cash, the airline said in a notice to the Hong Kong Stock Exchange.

The airline also has shares traded in Shanghai and New York.

China Southern, based in the southern city of Guangzhou, said it would submit a proposal for the share issue within 10 days.

The announcement was expected: speculation over possible government support for several major carriers had increased volatility in the shares of Chinese airlines in recent weeks.

Rival carrier China Eastern Airlines also announced that it was suspending trading in its shares Thursday. The Shanghai-based carrier issued a notice warning of potential losses from fuel hedging contracts _ a problem afflicting many in the industry that betted on higher oil prices, only to see them fall in recent months.

China Eastern said the fair-value loss on its fuel hedging contracts was 1.83 billion yuan (about $268 million) on Oct. 31, up from 270.8 million yuan ($39.6 million) a month before.

The airline reportedly is also seeking government support.

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