In October, after a year of unexplained delays, Taiwan's government finally approved a groundbreaking plan by state-controlled China Airlines (CAL) to take a 25% stake in Shanghai-based China Cargo Airlines. Formed in 1998, the all-cargo carrier operates a fleet of three Boeing MD-11 freighters.
The important deal is the first of its kind between carriers from Taiwan and the mainland. China considers Taiwan a renegade province and there are no diplomatic ties or even direct flights between the two sides. But Taiwanese companies are much sought-after investors in China, and the high-profile deal has been seen as one that can help ease tensions.
CAL announced in September last year that it had agreed to buy a 25% share in China Cargo from 70% owner China Eastern Airlines and 30% owner China Ocean Shipping for around 675 million yuan ($82 million).
Both sides said at the time that necessary government approvals should be secured before the end of 2001 but Taiwanese authorities held up their approval for unexplained reasons, leading to speculation that the proposal could be rejected.
CAL said in mid-October, however, that it had finally won approval from Taiwan's Ministry of Economic Affairs to acquire 25% of China Cargo for $47 million. The deal is expected to be finalised in the first quarter of next year. CAL does not say why the purchase price is significantly lower than the original estimate.
Direct transport links between the two sides were severed in 1949 when nationalist forces fled to Taiwan after communist powers took over. Since then passengers and air cargo have been forced to pass through third points, usually Hong Kong or Macau.
Source: Airline Business
