Cathay-Air China cargo operation starts sooner than expected

HONG KONG's Cathay Pacific Airways and its affiliate Air China have commenced their long planned joint freight flight operations, clearing away bureaucratic delays sooner than expected.


The corporate relationship is complex. Air China owns 30 per cent of Cathay, making it the second-largest shareholder in the carrier after Swire Pacific. Cathay owns 19 per cent of Air China, the nation's flag carrier as well as its biggest international air carrier.


In a joint statement with Air China, Cathay director Ian Shiu said the freight transaction had been done on March 18, but because of bureaucratic obstacles it was thought that operations could not commence before October.


Cathay, the world's largest international freight airline, will now add cargo hubs in Shanghai and Beijing to its Hong Kong base, reported Bloomberg. For its part, Air China will get Cathay's help in competing with FedEx and Korean Air Lines, for a bigger market share of China's export market.


Cathay in February 2010 said it would invest CNY1.7 billion (US$259 million) in Beijing-based Air China's cargo unit to form the new venture. It will control 49 per cent, including a stake held through an offshore trust.


Cathay expected to add four Boeing 747-400 freighters and two spare engines to the cargo unit to pay for the deal. Cathay and Air China first proposed the cargo venture in 2006, as part of Cathay's takeover of Hong Kong's Dragonair.
(Source:http://www.schednet.com)