From joint press release CX
POSSIBLE STRATEGIC EQUITY INVESTMENT
CATHAY PACIFIC IN
Air China Limited ("Air China") and Cathay Pacific Airways Limited ("Cathay Pacific") jointly announce that they have today entered into a memorandum of understanding ("MOU") stating Cathay Pacific's intention to acquire a 9.9% shareholding in Air China at the time of Air China's IPO. The MOU also deals with future cooperation between the two companies. Both companies consider that the proposed strategic investment will serve as a platform from which to explore further opportunities for developing a closer partnership.
Strategic Equity Investment
Air China proposes to list its H shares on the Hong Kong Stock Exchange by way of a global equity offering. An application has been made to the Hong Kong Stock Exchange for the listing of, and permission to deal in, the H Shares of Air China.
On 20th October 2004, Cathay Pacific entered into a MOU with Air China stating Cathay Pacific's intention to acquire a 9.9% shareholding in Air China at the time of its Initial Public Offering ("IPO"), subject to completion of a strategic placing agreement which would be entered into by both parties prior to the IPO. Upon entering into this strategic placing agreement, Cathay Pacific will make a further announcement.
Future Cooperation Between Air China and Cathay Pacific
The MOU also deals with future cooperation between Air China and Cathay Pacific.
Air China and Cathay Pacific consider that a healthy aviation industry, which includes the continued growth and prosperity of both companies, will be assisted by the proposed strategic investment. The potential alignment of the networks of Cathay Pacific and Air China should assist in further developing and maintaining both Hong Kong International Airport and Beijing Capital International Airport as gateways to, and hubs for, Mainland China.
The MOU sets out the framework for discussing, among other things, the objective of exploring the opportunities for developing a close partnership and co-operation between the aviation and related businesses of Cathay Pacific and Air China in Hong Kong and Mainland China, including:
Joint marketing and sales activities to promote traffic between city pairs in their respective networks;
Co-ordination of operating schedules to enable the maximum feeding of passengers and cargo between their airlines;
Co-operation in the areas of engineering, ground handling, catering, cargo services, information technology, purchasing, safety and security;
Exchange and secondment of staff between the airlines; and
Product development support.
Commenting on the signing of the MOU:
Mr. Li Jiaxiang, Chairman of Air China said "We welcome Cathay Pacific's proposed equity investment and the clear confidence in Air China's future that this investment represents."
Mr. David Turnbull, Deputy Chairman and Chief Executive of Cathay Pacific said "We look forward to becoming Air China's strategic partner and to a mutually beneficial relationship between our two companies."
Mr. Kong Dong, Vice-Chairman of Air China said "We believe that there are many areas of our operations where we can cooperate together and leverage our respective strengths for the future prosperity of both companies."