AIR CHINA, Cathay Pacific and a third investor are to pump 2 billion yuan ($321 million) into their Air China Cargo freighter venture.
In a website statement, Cathay said that the funds will assist Air China Cargo to “adjust its fleet, to reduce its operating costs and to improve the performance of its main cargo business.
“In addition, the capital injection will assist Air China Cargo to develop its cargo charter flight business with China Postal Airlines and to establish a sound and sustainable basis for the development of its overall business.”
The capital injection for the Shanghai-based carrier, operating six B747-400Fs and three B777Fs up to April this year, was announced on a statement to the Hong Kong stock exchange.
National flag carrier Air China, with a 51 per cent stake, will contribute just over 1 billion yuan to the capital injection. Cathay Pacific China Cargo Holdings, with 25 per cent of the equity, will provide 500 million yuan.
A third Air China Cargo shareholder, owning a 24 per cent equity stake, is Fine Star of the British Virgin Islands. It will subscribe 480 million yuan.
The stock market announcement added: “Separately, the shareholders in Air China Cargo have made shareholder loans to Air China Cargo of 2 billion yuan in proportion to their shareholdings.”
It continued: “The consideration for the capital injection was determined after arm’s length negotiations among the parties with reference to, among other things, the financial condition and net asset value of Air China Cargo and the valuation of the assets.”
Air Cargo China was founded in December 2003. In March 2011, Air China and Cathay Pacific completed a joint venture freight project with Air China Cargo as the platform.
According to its website, Air China Cargo owned six B747-400Fs up to April this year, and has ordered eight B777Fs, with three already delivered.
Air China Cargo has introduced four B757-200SF, of which two have been modified and put into operation as charters for mail transport. Air China Cargo also operates the bellyhold capacity of Air China.
