Paul Lewis/SINGAPORE
CHINA NATIONAL Aviation (CNAC) is pressing ahead with plans to establish a Hong Kong-based international airline, at the same time as negotiating to purchase a 10% stake in Dragonair
The new CNAC carrier, provisionally named China Hong Kong, has already begun to recruit Boeing 737-300 pilots with UK-recognised licences. The move is designed to support its application to the Hong Kong Civil Aviation Department (CAD) for an Air Operator's Certificate (AOC).
It has also hired former Dragonair operations general manager Lew Roberts to help assist with the start-up of the carrier. Roberts is understood to have particular experience with AOC applications, having originally been involved with the establishment of Dragonair in 1985.
CNAC (Hong Kong) submitted its AOC application to the CAD in March, with the intention of operating Airbus Industrie A300-600s. It has since scaled this back to the smaller 737-300. CNAC already operates two 737-300s and a Boeing 757 on charter services from Hong Kong to Chengdu and Chongqing in China.
Its application to set up China Hong Kong comes as a major shock to Cathay Pacific Airways, threatening its post-1997 position with the handover of the UK colony to Chinese rule. In response, Cathay and parent company Swire Pacific offered to sell a share of its highly profitable sister-carrier Dragonair to CNAC in an attempt to head off its bid (Flight International, 23-29 August).
In an interview with Hong Kong newspaper Sing Tao, however, CNAC general manager Wang Gui-xiang makes it clear, that its negotiations with Swire Pacific and Chinese investment company CITIC for a stake in Dragonair, are considered a separate issue and will not affect CNAC plans to set up a Hong Kong carrier.
An agreement has yet to be reached on the terms and conditions of a share sale and it has been suggested that CNAC might not be able to raise the required funds. Dragonair's market value has been boosted by CITIC's recent surprise revelation that Dragonair made a net profit of HK$593 million ($77 million) for 1994.
Dragonair's financial results have traditionally remained a closely guarded secret, but the disclosure has led to strong speculation that CITIC, together with Swire Pacific and Cathay Pacific, which collectively control 89% of the company, intend to list it publicly in the near future. Floating the company would help protect it after 1997, suggest analysts.
The Civil Aviation Administration of China (CAAC) is considering an offer by US currency speculator George Soros to purchase a 25% stake in provincial carrier Hainan Airlines. The $25 million deal has reportedly been approved by the local Hainan authorities, but still needs the permission of the CAAC to go ahead.
In the past, China has ruled out foreign investments in local carriers and it is unclear whether the Soros bid will prove to be any different.
Source: Flight International
