Air China gets 1.5b yuan capital injection
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Air China Ltd, the nation's flag carrier, inched a step closer to its goal of finalizing an air cargo joint venture with Cathay Pacific Airways by the end of June after the government approved a 1.5 billion-yuan capital injection into the airline.
The Beijing-based airline, also the nation's largest international carrier, will receive the funds from its controlling shareholder China National Aviation Holding Co.
Air China will use the capital to acquire a minority interest in its cargo unit, Air China Cargo, the airline said in a statement on Saturday. This makes it the third mainland carrier to receive a capital injection from the government.
China Eastern Airlines received 9 billion yuan while China Southern Airlines received 3 billion yuan last year.
Launched in 2003, Air China Cargo initially had three shareholders, including Air China with a 51 percent stake, CITIC Pacific Ltd with a 25 percent stake and Capital Airports Holding Co with a 24 percent share.
The carrier operates four Boeing 747-200 freighters and eight B747-400 planes, and has since become a wholly owned unit of Air China after the airline bought out CITIC Pacific in January 2008 and Capital Airports in April 2009.
With these acquisitions now completed, the 1.5-billion-yuan injection will be used to replenish Air China's working capital, the airline said.
"Air China is steadily moving forward on a cargo joint venture with Cathay Pacific. The air cargo market is expected to improve this year as demand from the US and Europe recovers. There is no better time than this to start the joint venture," said Li Lei, an aviation analyst with CITIC China Securities.
