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American Shipper

Reports say Cathay Pacific on brink of Dragonair purchase

Reports say Cathay Pacific on brink of Dragonair purchase

   Cathay Pacific Airways is reportedly about to spend about HK$10 billion ($1.3 billion) to gain all shares in fellow Hong Kong airline Dragonair, according to various media sources.

   The deal would make Cathay the biggest airline in Asia by offering it far greater access to the mainland China market.

   Cathay already owns 17.8 percent of Dragonair, and is expected to buy out the remaining stakes held in the airline by China National Aviation Co. (CNAC), CITIC Pacific and Swire Pacific via cash and share issues. CNAC owns 43.29 percent of Dragonair, while CITIC Pacific has 28.5 percent and Swire Pacific 7.71 percent.

   At the same time, Air China, which owns 66.4 percent of CNAC, is rumored to be about become Cathay’s third-largest shareholder after Swire Pacific and CITIC Pacific.

   In April, all the above-mentioned companies issued a joint denial of such a plan at the request of the Hong Kong Stock Exchange. Shares in Cathay, Air China, CITIC Pacific, Swire Pacific and CNAC were suspended on Monday following the renewed speculation.

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