Government to subsidize CA's Air China Cargo acquisition
Posted 20/01/2010
Air China parent CNAC is expected to receive a CNY1.5 billion ($219.4 million) cash injection from the Chinese government to pay back the loans it used to finalize last year's acquisition of its Air China Cargo subsidiary, according to CA Board Secretary Huang Bin.
The move is another step toward finalizing the cargo joint venture between Air China and Cathay Pacific Airways scheduled to be launched this year in Shanghai. CA increased its stake in the cargo company to 100% with the CNY718 million purchase of Beijing Capital Airport Holding Co.'s 24% share last spring (ATWOnline, April 3, 2009).
Air China Cargo was launched in 2003 with registered capital of CNY2.2 billion. CA held 51% initially while Citic Pacific subsidiary Gold Leaf Enterprises had 25% and BCAH 24%. CA's acquisition of the remaining 49% cost CNY1.57 billion.
"The CNY1.5 billion government cash injection will be used mainly to pay back our loans for purchasing the remaining 49% stake from minority stakeholders," Huang confirmed.
An industry insider told ATWOnline that as early as 2008, Beijing had decided to distribute CNY15 billion to the "big three" Chinese airlines. China Eastern Airlines already has received CNY9 billion in government funds and China Southern Airlines CNY3 billion over the past two years. The trio now will be vying for the remaining CNY1.5 billion.
by Katie Cantle
Originally published 21 Jan 2010 at: http://feeds.atwonline.com/~r/AtwDailyNews/~3/SqyULS26jJI/story.html
