Air China is in talks with potential joint-venture partners to spin off its freighter operation through the establishment of a new all-cargo airline.
Talks are taking place with Hong Kong-based conglomerate CITIC Pacific and the parent company of Beijing Capital International Airport. Many expect a deal to be secured by the end of the year under which the new airline would be based in Beijing and take over the operation of Air China's four Boeing 747-200 freighters.
CITIC Pacific is controlled by mainland Chinese interests. It controls more than a quarter of Hong Kong's aviation industry through stakes in Cathay Pacific Airways, Dragonair and Hong Kong Air Cargo Terminals, and has been seeking to expand by investing in mainland China's aviation sector.
CITIC confirms that it is holding talks with several parties including China National Aviation (CNAC), the commercial arm of the regulatory Civil Aviation Administration of China, as well as Air China and the operator of Beijing airport. CNAC's Hong Kong-listed unit of the same name has the biggest single stake in Dragonair, with 43% ownership. It also has a majority stake in Air Macau.
Like CITIC, CNAC has been seeking to expand its involvement in mainland China's aviation sector, which is going through a major consolidation exercise overseen by the government. Cargo, in particular, interests them both as the sector remains in its infancy.
There are currently two dedicated cargo airlines in China: international operator China Cargo Airlines, which is owned by China Eastern Airlines and China Ocean Shipping, and domestic operator China Postal Airlines, which is controlled by the country's postal service. China Southern Airlines recently agreed to buy 49% of China Postal.
Source: Airline Business
