Cathay, Air China cement relationship

Cathay Pacific's long anticipated takeover of Dragonair to unite Hong Kong's two leading airlines, is expected to be announced this week, the Financial Times reported. As part of the deal, Air China – Dragonair's largest shareholder – will get a reciprocal stake in Cathay, complementing Cathay's existing 10% stake in Air China. This should give Cathay and Air China an edge over rivals China Southern and China Eastern in Greater China's aviation market. Cathay will absorb China National Aviation (CNAC) and Beijing-backed CITIC Pacific's controlling 71.8% interest in a transaction reportedly worth US$1.3 billion.