Cathay, Air China joint venture starts looking shaky

CATHAY Pacific Airways is confident that the Chinese government will approve Cathay’s proposed cargo joint venture with Air China, says Cathay’s boss, Tony Tyler (right). This is despite the government’s recent announcement that it wants the country’s aviation industry to consolidate.

The consolidation will be in two parts: combining China Southern, China Eastern and Air Transportation Development’s airfreight businesses, and an airfreight joint venture between Air China and Air Transportation Development.

A source close to the Chinese plans says that the government prefers these plans rather than the Air China joint venture with Cathay.

To encourage the government Cathay has just raised its stake in Air China to 18.75 per cent from 18.48 per cent. The airline had already increased its stake from 18.1 per cent in February.