Although there was no mention of a stake in Shenzhen Air, media reports said China Southern has already talked to Beijing authorities about a possible purchase. Its director refused to comment.

Air China, which already owns 25 percent of Shenzhen Air, is also a player. The Beijing-based carrier took over management of Shenzhen Air after the carrier's former boss and majority stakeholder, Li Zeyuan, was arrested in November for economic crimes.

Privately owned regional airlines in China are facing nationalization in the aftermath of the global financial crisis. Chengdu Airlines, reorganized from China's first private carrier, United Eagle Airlines, started operation this month.

United Eagle Airlines, founded in 2004, suffered a cash crunch when the economic crisis slashed travel demand. It was acquired by state-owned Commercial Aircraft Corp of China, Sichuan Airlines and Chengdu Communications Investment Group last year.