I did a search on this, but nothing has come up.
From The Standard in Hong Kong
CITIC ready to cut back airline stakes
Tuesday, March 28, 2006
Beijing-backed conglomerate CITIC Pacific will reduce its minority stake in Cathay Pacific Airways and Hong Kong Dragon Airlines if a merger between the territory's two main carriers goes ahead, the firm's managing director Henry Fan said Monday, further signaling his support for such a restructuring.
An industry source said CITIC has been trying to play a balancing role between the mainland's China National Aviation Company, which owns a 43.29 percent stake in Dragonair, and Britain's Swire Pacific, the major shareholder in Cathay, as well as a minority stakeholder in Dragonair.
"It is a political issue," said the source close to Air China, parent of CNAC.
He said that, at least in the short term, there are no plans for such a merger, but confirmed that CNAC would like to gain a majority stake in Dragonair.
Last year, media reports claimed Cathay was in talks to take control of Dragonair, and that its parent Swire Pacific would subsume Air China.
In 2004, Cathay snapped up a 9.9 percent stake in Air China, but merger rumors were quickly denied by Air China, Swire and Cathay Pacific.
At that time, an Air China source insisted: "We are seeking further cooperation, not a merger."
In a complicated share structure - caused in part by the mainland's desire to own a portion of the SAR's flag carriers ahead of the handover - CITIC currently owns 28.5 percent of Dragonair, and has a 25.5 percent stake in Cathay.
In turn, Cathay, which is 46.3 percent owned by Swi
re, holds a 22 percent stake in its smaller rival.
Industry analysts said the possible consolidation of the two carriers would create one of the world's largest airlines by market value, and an Asian powerhouse that could feed an international customer base into greater China's most comprehensive route network.
It would also allow the airlines to rationalize their routes, and reduce overheads on sectors such as Hong Kong-Beijing.
Fan's statement clarified his company's intentions laid out last week when it announced its annual results and said it planned to continue pulling out of what it considered to be non-core businesses, including aviation, indicating that the firm could sell its stakes in the two airlines.
Passenger and cargo volume on both airlines is robust, but soaring fuel costs and intense fare competition have dented bottom lines.
An Air China spokeswoman in Beijing said: "As far as I know, there has not been any talk or news from the management about the changes of Dragonair's shareholder structure."
Cathay Pacific chief operating officer Tony Tyler was unavailable for comment.
Dragonair's net profits account for 52 percent of CNAC's total earnings. But Friday it said the carrier recorded a disappointing result in 2005, with net profits for the year down 59 percent to HK$270 million - far below market expectations. This caused CNAC's net profits to drop 38 percent last year to HK$225 million.
In the first day of trading since the announcement, CNAC's shares closed down 2.12 percent at HK$1.85 Monday, from HK$1.89.
Karen Chan, a local aviation analyst for Credit Suisse, believes a consolidation will make economic sense and, in the current environment of industry liberalization and high oil prices, the two airlines may either flourish together or risk stagnation.