Air China and Cathay Pacific reach agreement
Feb. 26, 2010, Shanghai, China - Major Chinese carrier Air China and Cathay Pacific Airways said Friday they plan to set up a joint cargo airline based in Shanghai, four years after the deal was first mooted.
February 26, 2010 By The Associated Press
Under an agreement signed Thursday, Hong Kong-based Cathay Pacific will contribute 1.67 billion yuan ($244.6 million) to the venture, taking a 25 per cent stake and holding another 24 per cent indirectly through an offshore trust. State-owned Air China will own 51 per cent, the companies said in a statement to the Hong Kong Stock Exchange.
Cathay Pacific's investment will include aircraft and engines for the joint venture, which will use the existing facilities and fleet of Air China subsidiary Air China Cargo.
Air China Cargo owns seven Boeing 747 freighters and also sells cargo space on Air China's passenger flights.
The two carriers, which announced plans for the venture in June 2006, said it is aimed at capturing business opportunities in the Yangtze River Delta region adjacent to Shanghai, one of the fastest growing areas in China.
Other major cargo carriers, such as DHL Worldwide Express Inc. and FedEx Corp. have also been expanding their operations in the region.
The agreement is subject to government approval in China and elsewhere.
Cathay Pacific owns an 18.1 per cent stake in Air China, while the mainland Chinese carrier holds a 29.99 per cent stake in Cathay Pacific.