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A major announcement is expected soon on a corporate restructuring designed to give Cathay Pacific greater access to the booming mainland aviation market, Hong Kong Cable News Channel reported on Monday.
Following Last year's report that Cathay, Dragonair and the China National Aviation Company (CNAC) were looking at a radical restructuring that could see Cathay completely absorbing the smaller Dragonair. The prediction emerged after the shares of Cathay and its major owners were suspended Monday morning.
Trading in the shares of Cathay Pacific, CNAC, its parent Air China Ltd. and CITIC Pacific Ltd., which also owns a stake in Dragonair, were suspended before Hong Kong's stock market opened this Morning.
According to Dow Jones Newswires Monday's report, Cathay Pacific Airways Ltd., which currently owns 17.8 percent of Hong Kong Dragon Airlines Ltd., plans to buy the chunk of the carrier, usually called Dragonair.
However, the report could not be immediately confirmed by spokespersons of either Cathay Pacific or Dragonair.
For Cathay Pacific, a buyout of Dragonair would give it much-needed access to more destinations in China.
Dragonair offers passenger services to 15 Chinese cities while Cathay Pacific only two, Beijing and Xiamen.
Cathay Pacific has sought for several years to start passenger services on the lucrative Hong Kong-Shanghai route but failed.
With only two destinations in mainland, Cathay Pacific is limited in its ability to serve the fast-growing market by feeding passengers from its worldwide network.
(Xinhua News Agency June 6, 2006)
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