A groundbreaking deal has been reached between airlines from mainland China and rival Taiwan that should see Taipei's China Airlines (CAL) taking a 25% stake in Shanghai-based China Cargo Airlines.
CAL signed a tentative deal early in September to take the 25% stake from China Eastern Airlines and China Ocean Shipping (COSCO). According to CAL, it will acquire the stake in China Cargo - which was established in 1998 - for around ´675 million ($82 million). The agreement remains subject to final government approval but barring any rise in political tensions in the coming months, this is expected to be granted by the end of the year.
Should the deal go ahead as planned, China Eastern's share of the mainland's only all-cargo airline will fall to 55% from 70%, while COSCO's will fall to 20% from 30%.
The deal is the first involving equity ties between airlines from China and Taiwan, which Beijing considers a renegade province. Direct flights have been banned between the two sides since communist forces caused their opponents to flee to Taiwan in 1949.
Many expect the groundbreaking agreement to help further improve relations between the two sides. It follows a recent deal in which four Taiwanese groups, including CAL, EVA Airways and Far Eastern Air Transport, took a combined 49% stake in a cargo terminal venture at Xiamen airport.
Other deals are in the pipeline, for example EVA is now in talks with China Southern Airlines on a cargo deal.
Source: Airline Business
