Cathay Pacific to acquire all remaining shareholding in Dragonair

Hong Kong's leading airline -- Cathay Pacific Airways Limited announced on Friday that it will acquire the remaining 82.21 percent shareholding in Dragonair for a consideration of 8.21 billion HK dollars (105 million U.S. dollars), making it a wholly owned subsidiary.

According to a press release from the Cathay Pacific, this will be settled by a combination of the issue of 548 million new Cathay Pacific shares at 13.50 HK dollars each.

Cathay Pacific, Swire Pacific, Air China, China National Aviation Company Limited (CNAC) and CITIC Pacific Limited jointly held a press conference Friday morning and they announced that the reached an agreement to change the shareholder structure of Cathay Pacific, Dragonair and Air China.

The new structure will offer significant benefits for airline customers and for Hong Kong and Beijing as gateways to the Chinese mainland.

Under the agreement, which is subject to shareholder approvals, Dragonair will be wholly owned by Cathay Pacific. Air China will acquire a 17.5 percent stake in Cathay Pacific, and Cathay Pacific will double its shareholding in Air China to 20 percent.

Swire will remain the principal, long-term shareholder in Cathay Pacific. Dragonair will continue to operate under its own brand, but under Cathay Pacific management.

Cathay Pacific and Air China will continue to develop closer cooperation on many fronts, including establishing an air cargo joint venture in Shanghai.

Cathay Pacific Chief Executive Philip Chen said "Cathay Pacific taking full control of Dragonair and strengthening its partnership with Air China will reinforce Hong Kong's role as the premier aviation hub in the Asia-Pacific Region and create one of the world's strongest airline groupings.

Air China Chairman Li Jiaxiang said, "This is an exceptional deal for Air China both in terms of valuation and strategy. Cathay Pacific and the Chinese aviation industry have much to gain, and our long term position, both in the domestic and international markets, will benefit significantly from the Operating Agreement between Cathay Pacific and Air China."

The five sides believe that the agreement is expected to produce far-reaching benefits across the board for customers, shareholders, employees and the Hong Kong economy.

It will enable Cathay Pacific to connect its international network with Dragonair's short-haul services to the Chinese mainland and secondary regional destinations, produce efficiencies and operational streamlining that will result in a wider network for the two airlines, more destinations, wider choice and greater convenience for customers.

The agreement will also help reinforce Hong Kong's position as the premier aviation hub in the Asia Pacific region and provide a platform for the growth and expansion for Hong Kong's home carriers into the Chinese mainland and the region.

The agreement will also further the development of Beijing Capital International Airport and Hong Kong International Airport as gateways to and hubs for the Chinese mainland by enabling Air China and Cathay Pacific to increase business and operational cooperation, increase traffic and load factors and enhance flight connectivity between all three airlines.

Cathay Pacific now has nearly 100 passenger and cargo planes, flying to over 100 global destinations. Dragonair flies to 23 Chinese mainland cities and operating over 300 flights a week. Its passenger network covers 32 world destinations.

Source: Xinhua