Air China, Swire boost stakes in Cathay Pacific

Air China will buy a 13% stake in Cathay Pacific Airways from Chinese conglomerate CITIC Pacific for US$761 million, bringing the mainland carrier’s stake in Cathay to nearly 30% from the current 17.5%, the Wall Street Journal reported. Hong Kong conglomerate Swire Pacific will purchase an additional 2% stake in Cathay for US$130.3 million, increasing its holdings to 42% from 40%. Both Swire and Air China paid US$1.66 per share, a 10.8% premium to Cathay’s Friday closing price of US$1.50.  A larger stake in Cathay, the owner of Hong Kong-based airline Dragonair, will give Air China greater access to the important hub of Hong Kong and will also bolster Cathay Pacific at a time when premium travel and cargo traffic has shrunk due to the economic crisis. Trading in Cathay Pacific, CITIC Pacific, and Air China shares was halted Monday.