Cathay sells HAECO stake to Swire, its biggest shareholder

HONG KONG's Cathay Pacific Airways has announced it will sell its 15 per cent in Hong Kong Aircraft Engineering Company Limited (HAECO) to Swire Pacific Limited for HK$105 (US$13.45) per share or HK$2.62 billion.

Swire Pacific, which is owns 42 per cent of Cathay, is the Hong Kong carrier's largest shareholder.

Upon completion of the sale of its stake in Hong Kong's largest aircraft maintenance company on June 14, Cathay will make a profit of about HK$1.82 billion.

"The transaction is driven by strategic priorities of Cathay Pacific and will benefit our core aviation business," said Cathay chief operating officer John Slosar.

Mr Slosar added that the longstanding operational relationship between Cathay and HAECO would remain unchanged as HAECO has always been the carrier's main provider of overhaul and maintenance services while the airline is HAECO's biggest customer.

Proceeds of the sale will go to the purchase of new aircraft, the new cargo terminal at the Hong Kong airport, as well as towards working capital requirements, said the Cathay statement.

"HAECO is a good asset," Credit Suisse analyst Cusson Leung told Bloomberg. "The transaction valuation is not cheap, but I think it serves the strategic restructuring of Swire."

Swire bought a 12 per cent stake in HAECO from Cathay last year for HK$91.83 a share.
(Source:www.schednet.com)