China Southern Airlines is awaiting central government approval for the financial lease of 20 new Boeing aircraft it hopes to add to its fleet beginning next year. The Guangzhou-based airline said the aircraft - Boeing 737-800s - would replace 20 older versions of the same series it operated under charter. If official approval is secured, the aircraft would be delivered to China Southern between next year and 2005. The airline, which operates the largest domestic network in China, will also have an option to buy each of the aircraft 10 years from the date of delivery. The leases should represent a significant upgrade to China Southern's balance sheet. At present, most of its fleet is effectively rented under operating leases that last between three to five years and represents a regular cost on the airline's profit and loss accounts. The aircraft have to be returned at the end of the period. However, the new arrangement will effectively be rent-to-own. As such, the 20 aircraft will appear on the company's balance sheet as an asset, bolstering its financial ratios. This will become significant as the mainland aviation sector moves towards consolidation and China Southern is merged with smaller, weaker airlines. 'The mainland aviation sector is going to undergo state-sponsored consolidation soon and anything that will make the three biggest airlines - China Southern, China Eastern Airlines and Air China - appear stronger will be of benefit,' one aviation analyst said. The move towards financial leases should also lower China Southern's monthly payments for its aircraft. Sources in Beijing indicate that the State Development Planning Commission has already approved the order of nearly 40 Boeing wide-body aircraft - including China Southern's 20.