Henan Civil Aviation Investment Co. Ltd., one of 10 provincial investment platforms in Henan province, plans to invest 3 billion yuan in the restructuring of the Henan unit of China Southern Airlines Ltd. (600029.SH, 1055.HK).

According to local media, Henan Civil Aviation Investment was co-formed by three state-owned enterprises, Henan Coal & Chemical Industry Group, Henan Transportation Investment Group and Zhengzhou Property Investment Group.

The company plans to complete a 2.478 billion yuan investment this year. The total restructuring will cost the provincially owned company 1.2 billion yuan this year, covering half of the company's total annual investment.

China Southern Airlines is the third airline to cooperate with a local government in restructuring.

China Eastern Airlines Corp. Ltd. (600115.SH, 0670.HK) completed the restructuring of its Wuhan unit with two local state-owned investment companies in April. The municipal government injected 700 million yuan, raising its stake in the local unit for the airline 10-fold from 4 percent to 40 percent.

National carrier Air China Ltd. (601111.SH, 0753.HK) also cooperated with Dalian Airlines Co. Ltd. and Beijing Airlines Co. Ltd., and announced on May 23 that it would form a JV with Inner Mongolia’s municipal government.

Tan Wangeng, general manager of China Southern Airlines, said the cooperation with local government is aimed at lowering the company's debt ratio. Annual report shows that the debt ratio for China Southern Airlines, China Eastern Airlines and China Airlines were 70.88 percent, 80.27 percent and 71.44 percent, respectively, in the last financial year.

Data from the Civil Aviation Authority of China show that aviation companies reported a 1.37 billion yuan loss in May, though domestic oil price decreased by 1.6 percent.

Earlier this month, China announced plans to build 70 new airports within the next 3 years and buy on average more than 300 planes a year until 2015.