Cathay seals Dragonair ownership

Cathay seals Dragonair ownership    Hong Kong-based Cathay Pacific Airways has completed all the necessary approvals and conditions to make Hong Kong Dragon Airlines Ltd. (Dragonair) a wholly owned subsidiary.
   Cathay is now Asia’s biggest airline with far greater access to the mainland China market. Cathay said Dragonair will retain its separate brand identity, although nearly 200 Dragonair employees will be made redundant.
   “This is an important day for both Cathay Pacific and Dragonair that marks the culmination of two years of complex negotiations,” said Philip Chen, Cathay’s chief executive.
   In June, Cathay paid HK$8.22 billion ($1.05 billion) to Air
China-subsidiary China National Aviation Co., CITIC Pacific, and Swire Pacific for the outstanding shares in Dragonair.
   As part of the deal, Air China raised its stake in Cathay to 17.5 percent, purchasing a 10.16 percent equity interest from Swire Pacific and CITIC Pacific. In return, Cathay doubled its shareholding in Air China to 20 percent from 10 percent.
   Swire Pacific remains the principal shareholder in the enlarged Cathay Pacific group, but along with CITIC has agreed to reduce its shareholding in Cathay to 40 percent and 17.5 percent, respectively, within a year.
   As well as increasing their cross-shareholding, Cathay and Air China have entered into an operating agreement that includes setting up a joint cargo airline in Shanghai and the extension of code share arrangements between Hong Kong and mainland China.
   “The linking of Cathay Pacific, Dragonair and Air China will bring significant benefits to the Hong Kong and Beijing hubs and aviation in the region generally,” Cathay said in a statement.