Air China Ltd raised its stake in Hong Kong carrier Cathay Pacific Airlines Ltd to 30 per cent in a move aimed at boosting the competitiveness and international reach of mainland China's largest airline.
Air China will buy a 12.5 per cent Cathay stake for about 6.4 billion Hong Kong dollars ($812 million) from conglomerate CITIC Pacific, increasing its total holdings in Cathay to just under 30 per cent, the companies announced late Monday.
Meanwhile, Cathay's largest shareholder, conglomerate Swire Pacific, will raise its stake to nearly 42 per cent from about 40 per cent.
The deal gives China's growing airline industry expanded access to international routes as well as the expertise and resources of Cathay, one of Asia's leading carriers.
It also solidifies Air China's presence in Cathay's home market of Hong Kong after the Chinese company lost its bid to expand in Shanghai, China's biggest business center and a major transportation hub, by securing a stake in Shanghai Airlines. Air China was beat out by about main rival China Eastern. Shares of Air China fell over 5 per cent in Hong Kong trade on Tuesday. Cathay shares were down 0.5 per cent.