Royal Air Cambodge (RAC) is working out a joint venture with an unnamed Chinese

airline, according to a government official.

"Without a new joint venture RAC will not be moving forwards because it has

no money," said Sith Sakol, department director at the Civil Aviation Authority.

He said RAC would compensate its Malaysian shareholders before signing any new agreement.

Industry sources say RAC has run up losses of $20 million in recent years.

Competition for RAC is likely to get stiffer with the announcement this week that

Bangkok Airways is setting up a new subsidiary called Siem Reap Airways. Flights

between Phnom Penh and Siem Reap are scheduled to start on Oct 29.