CITIC sheds 14.5pc of Cathay, Air China buys 12.5pc, Swire takes 2pc

AIR China, Cathay Pacific, CITIC Pacific and Swire Pacific have announced that CITIC will sell a 12.5 per cent shareholding in Cathay to Air China for HK$6.3 billion (US$813.8 million) and sell two per cent to Swire Pacific for HK$1.01 billion at the same HK$12.88 share price.

This means Air China's stake in Cathay Pacific will increase from 17.49 per cent to 29.99 per cent, while Swire's will increase from 39.97 per cent to 41.97 per cent.

"The changes will strengthen the existing relationship between Air China and Cathay Pacific and serve to boost the position of Beijing and Hong Kong as key aviation hubs in the region," said a joint statement from the companies.

Subject to regulatory approval, the changes announced to the Hong Kong stock exchange are part of the 2006 restructuring that saw Air China invest in Cathay Pacific and Cathay Pacific increase its investment in Air China as well as absorb Dragonair as a wholly owned subsidiary.

Air China and Cathay then entered into a system of reciprocal sales representation, greater code sharing and plans for a cargo joint venture in Shanghai as well as cooperation in other areas.

Said Cathay Pacific: "Cathay Pacific is looking forward to working even more closely with Air China to leverage opportunities that will arise from strengthening ties between two great airline brands."

Said Swire Pacific: "Swire Pacific regards its additional shares in Cathay Pacific as confirmation of its full support for Cathay Pacific. We welcome the increase in Air China's shareholding and believe it will serve to further cooperation between the carriers."

Said Air China: "This increase in shareholding will be useful in terms of boosting the international competitive strengths and brand value of Air China."

Said CITIC Pacific: "This disposal is in keeping with CITIC Pacific's plan to focus on its major businesses."
 

Source: Schednet