Cathay Pacific Airways has sold a stake in its Hong Kong maintenance, repair and overhaul (MRO) business and it has agreed to sell and leaseback six Boeing 777s to improve its balance sheet.
The Oneworld carrier says it is selling a 12.45% stake to Swire Pacific for HK$1.9 billion ($245 million) and this will reduce its shareholding in Hong Kong Aircraft Engineering (HAECO) to 15% from 27.45%. Swire Pacific's stake rises to 45.96% from 33.52%.
It also says it has agreed to sell to BOC Aviation and leaseback six 777-300ERs it has on order. The aircraft are due to be delivered from 2009'S fourth quarter to 2011's second quarter, it says.
"From a Cathay Pacific point-of-view, it will improve the airline's cash position during an extremely difficult time for the aviation industry," says Cathay Pacific CEO Tony Tyler.
Cathay will still "retain a strategic interest in HAECO" but "cash preservation has remained Cathay Pacific's top priority during this downturn."
"The sale of part of our HAECO stake will provide funds that will strengthen our balance sheet," he says.
HAECO is the main provider of overhaul and maintenance services to Cathay Pacific.
Tyler says: "There are signs the recent slump in business may be levelling out but there is unlikely to be a sharp rebound."
He says Cathay Pacific is in negotiations to delay delivery of aircraft on order but has no intention to cancel aircraft orders. According to Flightglobal's ACAS database Cathay Pacific has 19 777-300ERs on order, 10 Boeing 747-8Fs and eight Airbus A330-300s.
BOC Aviation says this is the first time the leasing company has worked with Cathay Pacific.
"This completes the first phase of our purchase and leaseback programme under our counter-cyclical strategy," says BOC Aviation managing director and CEO Robert Martin, referring to its plan to buy aircraft from airlines during the downturn.
Bank of China owns 100% of BOC Aviation.
Source: Air Transport Intelligence news
