Guangxi South Holding Company has sold 35% of its stake in Guangxi Airlines to China Southern for RMB84.79 million, which has made the latter's share in Guangxi Airlines increase to 95%.

Local reports show that the main reason for the transaction is that Guangxi South is in urgent need of funds to ease its debt burden.

However, analysts say the deal is a defensive action taken by China Southern against the expansion of its competitor Hainan Airlines.

At present, China Southern holds stakes in two airlines in the southwest region, while Hainan Airlines is expanding very rapidly in the region. Hainan Airlines has already opened a branch in Yunnan and is planning another one in Chongqing soon.