CITIC sells shares after company losses
Air China has paid $808m for a 12.5% stake in Cathay Pacific.
It increases the Chinese national carrier's holding in the Hong Kong-based airline from 17.49% to 29.99%, fractionally short of the stake required for a compulsory takeover bid.
The shares were sold by CITIC Pacific, a Chinese investment group which has lost $2bn in foreign exchange deals.
CITIC, which previously held a 17.49% in Cathay, also sold 2% of these shares to Swire Pacific, Cathay's parent company.
It brings Swire's holding in the airline to 41.97%, strengthening its position as Cathay's largest shareholder.
Before the deal took place, shares in the two airlines and CITIC were suspended on the Hong Kong Stock Exchange
Reuters reported that at a press conference in Hong Kong, Christopher Pratt, Cathay's chairman, said: "We welcome this as a strengthening of our strategic partnership with Air China."
The two carriers already co-operate on code-sharing, a frequent flyer programme and staff training.
Swire and Cathay first entered into agreement with Air China in 2006 in which Cathay took a 20% stake in Air China.
The London Financial Times quoted Mr Pratt, who is also chairman of Swire, as saying: "It remains the firm intention of Swire Pacific to remain the single largest shareholder in [Cathay], as indeed we have been for the past 60 years.
"As we have made plain many times in the past, Swire Pacific is wholeheartedly committed to the long-term development of the aviation industry in Hong Kong and the mainland."
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