18 August 2009

Air China swoops on another slice of Cathay Pacific

HONG KONG - Air China has increased its stake in Cathay Pacific as part of a share sell-off by CITIC Pacific.

Under the proposed changes, which are subject to regulatory approvals, CITIC Pacific will sell a 12.5 percent shareholding in Cathay Pacific to Air China and a two percent shareholding in Cathay Pacific to Swire Pacific for an aggregate consideration of approximately HK$1,013 million.

As a result, Air China's stake in Cathay Pacific will increase from approximately 17.49% to approximately 29.99%, while Swire Pacific's stake in Cathay Pacific will increase from approximately 39.97% to approximately 41.97%.

The proposed changes follow on from a major shareholding restructuring announced in June 2006 that saw Air China make a strategic investment in Cathay Pacific; Cathay Pacific increase its strategic investment in Air China and Dragonair become a wholly owned subsidiary of Cathay Pacific.

At the time, Air China and Cathay Pacific also entered into a strategic relationship that included reciprocal sales representation, the extension of code-share arrangements between Hong Kong and Mainland China, the proposed development of a cargo joint venture in Shanghai and the strengthening of business cooperation in a number of other areas.

Commenting on the latest shareholding realignment, Air China it would generate greater synergy for Air China and Cathay Pacific and would boost the international competitive strengths and brand value of Air China.

CITIC Pacific said the share of its stake in Cathay Pacific was in keeping with the company's plan to focus on its major businesses.

CITIC PacificÃ¢â¬â¢s business interests include iron ore mining, property, aviation, civil construction and power generation.