More signs are emerging that a sweeping ownership shake-up is in store for Hong Kong’s convoluted air transport sector.
Hong Kong-listed companies Air China, Cathay Pacific Airways, China National Aviation (CNAC), CITIC Pacific and Swire Pacific say in a joint statement that they are discussing “the realignment of shareholdings in Cathay Pacific, Air China and Dragonair”.
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| The changes could give Cathay Pacific more acccess to the Chinese market |
The exact nature of the talks is unclear, but the announcement has come a year after it was first revealed that shareholding changes were being discussed among the many interested parties. Sources in Hong Kong said at the time that the changes could lead to Cathay reacquiring smaller Dragonair and at the same time boosting ties with Chinese flag carrier Air China, which could buy into Cathay by acquiring shares from CITIC.
Hong Kong’s airline sector is highly complicated in terms of ownership: Swire is the biggest single shareholder in Cathay with more than 46% and it has a near 8% stake in Dragonair; Cathay owns nearly 18% of Dragonair and has a 10% stake in Air China; Air China owns CNAC, which is the biggest single shareholder in Dragonair with 43%; and CITIC owns more than 25% of Cathay, 28.5% of Dragonair and is a joint-venture partner in Air China Cargo.
Cathay has been in talks to co-operate more with Air China and this could include bringing China-focused Dragonair back under its control, say analysts. However, Cathay also wants to increase its operational presence in China and others believe it could in fact do the opposite and sell down its stake in Dragonair, which it formerly controlled, by handing its shares to CNAC in return for Chinese government promises of more access to the fast-growing mainland market.
Whatever happens, the companies make clear that complicated ownership links will remain in the years ahead, as Swire “intends to remain the principal shareholder in Cathay Pacific in the long term”, Air China will continue to be controlled by a unit of the Chinese government and Air China has “no current intention to privatise CNAC”.
The five companies add that while CITIC “may reduce its interest in Cathay Pacific, it intends to remain in the long term a significant shareholder”.
They also say: “It is intended that Dragonair is to maintain its brand and identity and that it will remain a principal airline in the Hong Kong and China mainland aviation markets.” ■
NICHOLAS IONIDES / SINGAPORE
Source: Airline Business
