Cathay Pacific Airways faces a technical change in its ownership after its shares were suspended on the Hong Kong stock exchange.
Cathay’s shares were suspended along with those of China’s Beijing-based flag carrier Air China and investment group CITIC Pacific. Cathay owns an 18.09% stake in Air China while CITIC owns 17.46% of Cathay.
One of the first sites to report this was, quite amazingly, Africa Aviation, which said that Air China plans to buy up to a 13% stake in Cathay from CITIC. The Swire Group would remain Cathay’s largest shareholder with a 40% stake.
Air China failed in its attempt to buy Shanghai-based China Eastern Airlines last year. Last month, China Eastern agreed to buy Shanghai Airlines.
It now seems likely that Air China will spend $813 million to raise its stake in Cathay Pacific Airways to 29.99%. Swire Pacific will also buy HK$1 billion of Cathay shares from Citic at the same price, an 11% premium. Which means that Swire will remain Cathay’s largest shareholder.
Cathay may benefit from closer ties with China’s second-largest carrier. Air China could benefit by having Cathay Pacific standards of inflight service.
Air China and Swire both bought as much of Cathay as they could without triggering mandatory takeover offers. Christopher Pratt, chairman of Swire and Cathay, said the talks on the sale were "very speedy".
He said, "While I confidently expect our strategic partnership with Air China to continue to grow, I would stress that the new shareholding will not mean any change in the current strategy and operational and financial management of Cathay Pacific."
The airline operates 123 planes, flying to 36 countries or territories, according to its web site. Its Hong Kong Dragon Airlines Ltd. unit serves 29 destinations, predominately on the mainland. American Roy C. Farrell and Australian Sydney H. de Kantzow set up Cathay in 1946. A forerunner to Swire Group acquired a 45% stake in 1948. Cathay Pacific also had the world’s first regular inflight magazine, Discovery. It was started by this writer.