Air China and Hong Kong's Cathay Pacific hope to conclude a cargo joint venture deal by the end of the year.
The two carriers first announced plans for the JV in 2006. An Air China spokeswoman says the deal "should have been done earlier", but adds that the carriers are targeting the end of this year to conclude a deal.
The joint venture's routes and fleet composition are under discussion by a working group, she says. It will probably be based in Shanghai and fly both domestic and international routes. It is also likely to be 51% owned by Air China, she adds.
A report in Hong Kong's South China Morning Post says the two parties accelerated talks due to the planned merger of Shanghai-based carriers China Eastern and Shanghai Airlines. The spokeswoman denies that talks have been accelerated because of the planned merger.
"Both sides agreed to have a cargo joint venture in 2006, so you could say we already missed the target," says the spokeswoman.
She attributes the delay to Dragonair becoming a wholly owned subsidiary of Cathay Pacific in 2006, resulting in "internal restrictions" that affected negotiations about the cargo joint venture.
Air China owns just under 30% in Cathay Pacific. Earlier this month, it bought a 12.5% stake in the Hong Kong carrier from CITIC Pacific in a transaction worth HK$6.335 billion ($817 million).
At the time of Air China's stake increase, Cathay Pacific described the changes as a "realignment" of the carriers' respective interest.
"This increase in shareholding will be useful in terms of boosting the international competitive strengths and brand value of Air China," said Air China, adding that the agreement would "serve as a platform for further co-operation".
Cathay Pacific said that it is looking to "leverage the opportunities" that would emerge from the "strengthening of the ties" between the airlines.
Source: Air Transport Intelligence news
