Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
CX And Air China In Ownership Negotiations  
User currently offlineOP3000 From United States of America, joined Jun 2009, 1785 posts, RR: 2
Posted (5 years 4 months 4 days 5 hours ago) and read 3641 times:

Just posted - Air China to buy into Cathay Pacific.

Good news for both IMO. The obvious question is: could these be eventual merger partners?

http://www.flightglobal.com/articles...shares-suspended-on-ownership.html

Cathay Pacific Airways is poised to announce a change in its ownership after its shares were suspended on the Hong Kong stock exchange today.

"We are working on an announcement and we hope to make it later today," says a spokeswoman at Hong Kong's flag carrier. She declined to provide further details.

The oneworld alliance member's shares were suspended on the exchange 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, according to Flight's ACAS database.

News reports out of Hong Kong and China 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.

11 replies: All unread, jump to last
 
User currently offlineCloudyapple From Hong Kong, joined Jul 2005, 2454 posts, RR: 10
Reply 1, posted (5 years 4 months 4 days 5 hours ago) and read 3599 times:

Quoting OP3000 (Thread starter):
Just posted - Air China to buy into Cathay Pacific.

Good news for both IMO. The obvious question is: could these be eventual merger partners?

First of all Cathay and Air China already have cross ownerships in each other.

The latest change in ownership is only an internal reshuffle within the red bloc. No material change to the overall control of Cathay. It's business as usual for Cathay and there's still no logic to a merger.

[Edited 2009-08-17 02:39:51]


A310/A319/20/21/A332/3/A343/6/A388/B732/5/7/8/B742/S/4/B752/B763/B772/3/W/E145/J41/MD11/83/90
User currently offlineUnited Airline From Hong Kong, joined Jan 2001, 9210 posts, RR: 15
Reply 2, posted (5 years 4 months 4 days 5 hours ago) and read 3566 times:

Will Swire Group remain as the no 1 owner of CX?

I see no reason why they will not.......


User currently offlineUnited Airline From Hong Kong, joined Jan 2001, 9210 posts, RR: 15
Reply 3, posted (5 years 4 months 4 days 5 hours ago) and read 3555 times:

Oh yes it will.

This will never change. No reason to


User currently offlinePVG From Hong Kong, joined Dec 2004, 728 posts, RR: 2
Reply 4, posted (5 years 4 months 4 days 5 hours ago) and read 3539 times:



Quoting Cloudyapple (Reply 1):
It's business as usual for Cathay and there's still no logic to a merger.

Do you mean that if they changed the name to "Cathay Air China" and allowed Cathay to operate international flights from PVG and PEK to destinations other than HKG using Cathay equipment, staff, and service levels while leaving CA to run the China domestic ops that they wouldn't be a much more competitive airline VS. European/US/and other asian airlines? I see a tremendous opportunity if they could get over the idea of a national airline and looked at it in strictly business terms. I'm sure that they could take alot of business from both US and European airlines, especially in the front where the money is.


User currently offlineCloudyapple From Hong Kong, joined Jul 2005, 2454 posts, RR: 10
Reply 5, posted (5 years 4 months 4 days 3 hours ago) and read 3390 times:



Quoting PVG" class=quote target=_blank>PVG (Reply 4):
Do you mean that if they changed the name to "Cathay Air China" and allowed Cathay to operate international flights from PVG and PEK to destinations other than HKG using Cathay equipment, staff, and service levels while leaving CA to run the China domestic ops that they wouldn't be a much more competitive airline VS. European/US/and other asian airlines? I see a tremendous opportunity if they could get over the idea of a national airline and looked at it in strictly business terms. I'm sure that they could take alot of business from both US and European airlines, especially in the front where the money is.

Why would Swire want to give up its majority shareholding in a Cathay in exchange for next to no say in the bigger entity?

Why would Cathay want to move from a highly deregulated environment that is Hong Kong into a highly regulated environment that is China?

A merger will create huge issues with air traffic rights since Hong Kong is a separate entity to China. There are other regulatory issues since HK and China run 2 separate regulatory systems and safety standards. Not to mention the pilots and other staff will absolutely oppose such a merger - integrating Dragonair was difficult enough.

There's no incentives for the majority shareholder, governments, regulators and employees.

Cooperation should be and is already done via codeshares and that is all that is necessary.



A310/A319/20/21/A332/3/A343/6/A388/B732/5/7/8/B742/S/4/B752/B763/B772/3/W/E145/J41/MD11/83/90
User currently offlineCloudyapple From Hong Kong, joined Jul 2005, 2454 posts, RR: 10
Reply 6, posted (5 years 4 months 4 days 2 hours ago) and read 3276 times:

http://www.cathaypacific.com/cpa/en_...3d90823210VgnVCM62000007d21c39____

Quote:
Under the changes announced today, which are subject to the appropriate regulatory approvals, CITIC Pacific will sell a 12.5% shareholding in Cathay Pacific to Air China for an aggregate consideration of approximately HK$6,335 million, representing a price of HK$12.88 per Cathay Pacific share, and a 2% shareholding in Cathay Pacific to Swire Pacific for an aggregate consideration of approximately HK$1,013 million, also representing a price of HK$12.88 per Cathay Pacific share.

This means Air China’s stake in Cathay Pacific will increase from approximately 17.49% to approximately 29.99%, while Swire Pacific’s stake in Cathay Pacific will increase from approximately 39.97% to approximately 41.97%.

Surprise surprise, 2% to the blue camp!



A310/A319/20/21/A332/3/A343/6/A388/B732/5/7/8/B742/S/4/B752/B763/B772/3/W/E145/J41/MD11/83/90
User currently offlineAstral From Canada, joined Mar 2004, 214 posts, RR: 0
Reply 7, posted (5 years 4 months 3 days 18 hours ago) and read 3022 times:

Not a big surprise for those in HKG watching the drastic fall of CITIC Pacific at the HK Stock Exchange. CITIC Pacific loosed millions because of bad investment in Accumulator, with the result that its Chairman has to resign. It was rescued by its headquarters in Beijing, and it was expected to sell some of its assets to refinance the Corporation. CX is one of CITIC Pacific best asset, however, with the continual fall of CX's revenue, which could put negative pressure on CITIC Pacific already depleted value, it would be best be sold off now while still maintain at a profit figure.
Again as normal, doing business with China involved politics, and selling CITIC Pacific's CX share can only be to another Chinese entity, and naturally would be Air China, which is already a share holder.
There will not be any merger with Air China, and China will continual to allow Swire to be the single share holder holding the most number of shares, while other Chinese entities holds the combined majority number of shares. CX's ownership (just as with the HSBC Bank) was an mutual understanding on the highest political level between China, Britain, and Hong Kong when Hong Kong was returned to China's rule in 1997.
There will never be a merger between CX and CA, it just doesn't make not only political sense, but also business sense. CX is using Dragonair as its 'tool' for the China market (the buy of Dragonair by CX was partly political !!), and so far there is still no solid plan to merge the KA brand into CX.
To me, it is an expected economic move by CITIC Pacific, and a political move by Air China and CX. Nothing more than that.


User currently offlineHuaiwei From Singapore, joined Oct 2008, 1117 posts, RR: 2
Reply 8, posted (5 years 4 months 3 days 17 hours ago) and read 2965 times:



Quoting Cloudyapple (Reply 1):
The latest change in ownership is only an internal reshuffle within the red bloc. No material change to the overall control of Cathay.



Quoting Cloudyapple (Reply 6):
Surprise surprise, 2% to the blue camp!

An increase in shareholding by over 12.5% is considered immaterial, while a 2% increase is a big surprise?  Wink Now of course there is no major change in who remains the largest shareholder, but does this involve additional Air China reps in the CX management board?

No need to be so quick to dismiss any possibility of a stronger tie-up in future.

Quoting United Airline (Reply 2):
Will Swire Group remain as the no 1 owner of CX?

I see no reason why they will not.......



Quoting United Airline (Reply 2):
Oh yes it will.

This will never change. No reason to

You seem to have answered your own question....again. Big grin

Quoting Cloudyapple (Reply 5):
Why would Swire want to give up its majority shareholding in a Cathay in exchange for next to no say in the bigger entity?

Because the bigger pie has the potential to make more money and give higher shareholder returns. Not everyone is desperate to have management power for the sake of it.

Quoting Cloudyapple (Reply 5):
Why would Cathay want to move from a highly deregulated environment that is Hong Kong into a highly regulated environment that is China?

Because this highly regulated environment is poised to be the world's biggest aviation market soon, while the highly deregulated environment is at risk of being bypassed and become a sunset industry. Who says more money can only be made in deregulated environments?

Quoting Cloudyapple (Reply 5):
A merger will create huge issues with air traffic rights since Hong Kong is a separate entity to China. There are other regulatory issues since HK and China run 2 separate regulatory systems and safety standards. Not to mention the pilots and other staff will absolutely oppose such a merger - integrating Dragonair was difficult enough.

What specific issues, may I ask? Did the merger of airlines between two sovereign states, such as those occurring in Europe, present the same pressing issues? Is the fear over the lost of HK "sovereignty" greater than the economic sense of integration and the creation of a potentially powerful Chinese airline based in two of the country's four major economic centres?

And kindly be specific in your comments pertaining to HK's position. It is a highly autonomous region of the PRC, and certainly not a "separate entity to China".

Quoting Astral (Reply 7):
CX's ownership (just as with the HSBC Bank) was an mutual understanding on the highest political level between China, Britain, and Hong Kong when Hong Kong was returned to China's rule in 1997.

And that "mutual understanding" will last till 2047, just 38 years left. Plenty can happen within that timeframe, if not already.

Quoting Astral (Reply 7):
There will not be any merger with Air China



Quoting Astral (Reply 7):
There will never be a merger between CX and CA, it just doesn't make not only political sense, but also business sense.

Never say never. MU may eventually buy up SQ, so CA might as well take an early pre-emptive strike! Big grin CA needs another base other than PEK to grow should it fail to grab significant market share in the Shanghai market (which is increasingly likely), and CX can't grow much while it remains stuck in HKG. In fact, CX needs the Chinese market much more than CA does, so the Chinese answer to "protecting HK interests" may very well include a merger! Big grin



It's huaiwei...not huawei. I have nothing to do with the PRC! :)
User currently offlinePVG From Hong Kong, joined Dec 2004, 728 posts, RR: 2
Reply 9, posted (5 years 4 months 3 days 15 hours ago) and read 2863 times:



Quoting Cloudyapple (Reply 5):
Why would Swire want to give up its majority shareholding in a Cathay in exchange for next to no say in the bigger entity?

Where did you read that they would be giving up majority shareholding? In any event, it is a business. If they were offered a substantial premium and a 10 year management contract with substantial profit-share, why not? Huaiwei has already answered most of the other points. I can see Cathay taking 50% of the long-haul premium market out of PEK and PVG practically over night if the flights were marketed as CX flights. I doubt that any of the Chinese airlines have anything near that share of the market. Their options for growth out of Hong Kong are limited. They are going to need to look at different avenues for growth. Nothing is easy. I don't know how old you are, but I think that at about the age of 25, you start figuring that out. If there's a will, there's a way!

By the way, the Dragonair integration has to be the best handled airline merger that I've ever seen. It was almost seamless. I don't understand why everyone is saying that it was so difficult. It went as well as could be expected.


User currently offlineAstral From Canada, joined Mar 2004, 214 posts, RR: 0
Reply 10, posted (5 years 4 months 3 days 14 hours ago) and read 2835 times:

To Huaiwei - I like those 'smiles' in your reply on my comments, Ha !
Yes, I like your wonderful idea about MU buying SQ !!! indeed never sya never !!! (Too bad I can't add those smiles here due computer issue but a HA ! HA ! will do).
Still I don't really believe a merger will occure anytime soon, just as remote as HSBC merge with Bank of China !! but closer cooperation between CA and CX are to be 100% sure.
Anyway, I still strongly believe it is a logical financial move by CITIC Pacific, not much more than that.


User currently offlineCX flyboy From Hong Kong, joined Dec 1999, 6638 posts, RR: 55
Reply 11, posted (5 years 4 months 3 days 13 hours ago) and read 2769 times:



Quoting PVG (Reply 9):
By the way, the Dragonair integration has to be the best handled airline merger that I've ever seen. It was almost seamless. I don't understand why everyone is saying that it was so difficult. It went as well as could be expected.

Merger did I miss something?


Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Air China... In Malta And Slovenia? posted Wed Mar 25 2009 10:31:39 by Seemyseems
CX And SIA Interest In Air India? posted Thu Jun 1 2000 10:22:27 by Cathay Pacific
US Airways And Air China Sign Code-sharing Deal posted Mon Jun 23 2008 08:44:31 by IliriBDL
KLM And Air France In Atlanta! posted Fri Nov 3 2006 14:53:19 by Ruslan
LH And Air China To Build A380 Hangar posted Fri Sep 22 2006 15:55:23 by Manni
What SQ CX And EK Have In Common posted Mon Oct 24 2005 03:07:55 by 9252fly
Air China In BOG posted Tue May 17 2005 03:44:15 by Bogota
Air China In CCS [charter] posted Fri Feb 4 2005 04:28:27 by Venezuela747
CX And Mainland China posted Mon Aug 16 2004 16:57:42 by B2443
Air China In PHL 12/25 posted Thu Dec 26 2002 06:33:18 by Haveric
LH And Air China To Build A380 Hangar posted Fri Sep 22 2006 15:55:23 by Manni
What SQ CX And EK Have In Common posted Mon Oct 24 2005 03:07:55 by 9252fly
Air China In BOG posted Tue May 17 2005 03:44:15 by Bogota
Air China In CCS [charter] posted Fri Feb 4 2005 04:28:27 by Venezuela747
CX And Mainland China posted Mon Aug 16 2004 16:57:42 by B2443
Air China In PHL 12/25 posted Thu Dec 26 2002 06:33:18 by Haveric