Air China to buy Cathay shares

AIR CHINA      CATHAY PACIFIC      

Hong Kong - Air China will purchase 12.5% stake in Cathay Pacific from CITIC Pacific for approximately HK$6,335 million (US$817 million).

In a statement, Cathay said the changes are expected to strengthen the existing relationship between Air China and Cathay Pacific and boost the position of Beijing and Hong Kong as key aviation hubs in the region.

"By increasing Air China's shareholding in Cathay Pacific, Air China and Cathay Pacific can form a closer cooperative relationship that will serve as a platform for further cooperation between, and generate greater synergy for, Air China and Cathay Pacific. This increase in shareholding will be useful in terms of boosting the international competitive strengths and brand value of Air China," Air China said.

"CITIC Pacific has been honoured to be a large shareholder of Cathay Pacific for many years, during which time the companies have enjoyed a very positive relationship. This disposal is in keeping with CITIC Pacific's plan to focus on its major businesses," said CITIC Pacific, which reported a US$1.9 billion deficit from foreign exchange contracts last year.

Swire Pacific is also expected to purchase 2% of Cathay Pacific's shares from CITIC. 

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