Air China Set To Buy HK Cathay Pacific Airlines - Report and Dragonair to buy Cathay,
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It may well be another tale of the little fish eating the big one!
It's not what you're worth but how much you can raise.
Any Canucks will remember the shock of learning that Pacific Western bought and took over Canadian Pacific Airlines. Circa??
VRT
It's not what you're worth but how much you can raise.
Any Canucks will remember the shock of learning that Pacific Western bought and took over Canadian Pacific Airlines. Circa??
VRT
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my 2 bit:
if this goes thru it will be more like the air france / klm merger, keep the brands , jobs etc etc, only the major developments will be in hands of the mainlanders, as if it were not so already , look at Tung and his gang..
if this goes thru it will be more like the air france / klm merger, keep the brands , jobs etc etc, only the major developments will be in hands of the mainlanders, as if it were not so already , look at Tung and his gang..
Left Wing
Another aspect is if this is true and Swire have the largest single shareholding, will they manage the new company or will the mainlanders manage it? My guess is that Swire will but won’t have a controlling interest. Not to different to their stake in CX at present! I think you are right in that all the companies will keep their own identity. Destinations will be rationalised though, and there will be a lot more cooperation and working together to enhance each of their respective markets.
Another aspect is if this is true and Swire have the largest single shareholding, will they manage the new company or will the mainlanders manage it? My guess is that Swire will but won’t have a controlling interest. Not to different to their stake in CX at present! I think you are right in that all the companies will keep their own identity. Destinations will be rationalised though, and there will be a lot more cooperation and working together to enhance each of their respective markets.
Last edited by 404 Titan; 16th Mar 2005 at 08:29.
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From The Wall Street Journal
Cathay-Dragonair Link More Viable Than Air China Buyout
By NISHA GOPALAN and RUBY CHAN
March 16, 2005 3:51 a.m.
Of DOW JONES NEWSWIRES
HONG KONG -- If all the talk that's circulating in the market is true, Hong Kong's de facto flag carrier Cathay Pacific Airways Ltd. (0293.HK) could soon own rival Dragonair and in the longer term could be bought out by China's national flag carrier, Air China Ltd. (0753.HK).
Analysts said that Cathay buying Dragonair, widely talked about in the past couple of weeks, was likely, but an Air China deal - while it makes sense eventually - would run into political and technical hurdles.
"It would be extraordinarily difficult to pull off," a three-way merger, a source familiar with the deal said.
On top of that, conglomerate Swire Pacific Ltd. (0019.HK) - Cathay's main shareholder - is unlikely to cede ownership of its cash-cow airline, which last year saw its earnings more than triple.
"The Cathay-Dragonair link is imminently doable. It's smaller financially and easier politically," said CLSA analyst Kevin O'Connor. "But the long-term picture is that if Cathay wants to have a meaningful presence on the mainland, it will have to get in with other Chinese airlines and Swire knows that."
On Wednesday, the South China Morning Post reported that Air China is in talks with Swire that could see the Chinese carrier take over Swire's 45%-owned Cathay.
Citing a senior Swire executive, the newspaper said Swire is in advanced negotiations that would see Cathay take over its rival Dragonair before being itself subsumed into the Air China Group.
Cathay declined to comment, while Swire said it would issue a statement later Wednesday.
An Air China spokesperson, however, denied the report, calling it speculation, and added that "there's nothing further beyond our 10% relationship with Cathay."
In November, Cathay paid about HK$2.91 billion for 10% in Air China, which listed in Hong Kong on Dec. 15.
Air China owns 69% of China National Aviation Co. (1110.HK), which controls small regional airline Dragonair. Cathay and Swire also own a combined 25% stake in Dragonair.
For Cathay, buying out Dragonair would spell wider access to China, which is essentially one of the world's fastest growing travel markets, giving it links beyond what it was accorded a couple of years ago.
Dragonair, meanwhile, would be able to stave off the inevitable erosion in its earnings when Cathay plays a significant part on the China market, while allowing it to be "plugged into Cathay's long-haul network," O'Connor said. The merged entity serving many of the same markets could also cut costs easily, analysts said.
"A merger between Cathay and Dragonair would be more straightforward, since both are Hong Kong carriers and the regulatory approval would only involve the Hong Kong government.. thus it's more feasible in the near term," said an analyst at ICEA Securities.
An official at Hong Kong's Economic Development and Labour Bureau said a tie-up would be a "commercial decision by the companies" but noted that the Bureau doesn't comment on rumors. A bigger hiccup will likely be the approval of CNAC and Chinese conglomerate CITIC Pacific Ltd. (0267.HK), which has stakes in both Cathay and Dragonair.
The Air China story is different, as the British-run Swire would probably end up with a substantial stake in the mainland airline, and that would be harder to get off the ground.
"The chance that Cathay would buy Dragonair is very high," SHK Financial analyst Gary Zhang said. "But it's hard to see how a British-run firm could become a major stakeholder in one of China's largest three airlines."
Spokespersons for both China's State-owned Assets Supervision and Administration Commission of the State Council and the Civil Aviation Administration said Wednesday that any talks between Air China and Cathay would be the firms' own businesses.
An airline consultant said that Swire itself could be part of the obstacle to a deal that sees Cathay under Air China's control.
"China has never wanted to have a British-controlled airline in Hong Kong, its backyard, and has been pushing to change this even before the handover (to Chinese rule of Hong Kong) in 1997," the airline consultant said. "But Swire has been reluctant to give up control of Cathay even for more China access."
Still, most analysts agree both sides would gain from such a link.
Swire gets to expand Cathay's network into one of the world's fastest growing travel markets, and Air China, "can benefit from this improved efficiency and western-style management," the ICEA Securities analyst said. Air China, which has ambitions to be a major international carrier, also gets a hold on Cathay's long-haul routes.
At the moment, about 60% of revenue of the mainland's carrier come from domestic flights.
-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343; [email protected] and Ruby Chan, [email protected]
(Sai Man contributed to this article)
-Edited by Costas Paris
By NISHA GOPALAN and RUBY CHAN
March 16, 2005 3:51 a.m.
Of DOW JONES NEWSWIRES
HONG KONG -- If all the talk that's circulating in the market is true, Hong Kong's de facto flag carrier Cathay Pacific Airways Ltd. (0293.HK) could soon own rival Dragonair and in the longer term could be bought out by China's national flag carrier, Air China Ltd. (0753.HK).
Analysts said that Cathay buying Dragonair, widely talked about in the past couple of weeks, was likely, but an Air China deal - while it makes sense eventually - would run into political and technical hurdles.
"It would be extraordinarily difficult to pull off," a three-way merger, a source familiar with the deal said.
On top of that, conglomerate Swire Pacific Ltd. (0019.HK) - Cathay's main shareholder - is unlikely to cede ownership of its cash-cow airline, which last year saw its earnings more than triple.
"The Cathay-Dragonair link is imminently doable. It's smaller financially and easier politically," said CLSA analyst Kevin O'Connor. "But the long-term picture is that if Cathay wants to have a meaningful presence on the mainland, it will have to get in with other Chinese airlines and Swire knows that."
On Wednesday, the South China Morning Post reported that Air China is in talks with Swire that could see the Chinese carrier take over Swire's 45%-owned Cathay.
Citing a senior Swire executive, the newspaper said Swire is in advanced negotiations that would see Cathay take over its rival Dragonair before being itself subsumed into the Air China Group.
Cathay declined to comment, while Swire said it would issue a statement later Wednesday.
An Air China spokesperson, however, denied the report, calling it speculation, and added that "there's nothing further beyond our 10% relationship with Cathay."
In November, Cathay paid about HK$2.91 billion for 10% in Air China, which listed in Hong Kong on Dec. 15.
Air China owns 69% of China National Aviation Co. (1110.HK), which controls small regional airline Dragonair. Cathay and Swire also own a combined 25% stake in Dragonair.
For Cathay, buying out Dragonair would spell wider access to China, which is essentially one of the world's fastest growing travel markets, giving it links beyond what it was accorded a couple of years ago.
Dragonair, meanwhile, would be able to stave off the inevitable erosion in its earnings when Cathay plays a significant part on the China market, while allowing it to be "plugged into Cathay's long-haul network," O'Connor said. The merged entity serving many of the same markets could also cut costs easily, analysts said.
"A merger between Cathay and Dragonair would be more straightforward, since both are Hong Kong carriers and the regulatory approval would only involve the Hong Kong government.. thus it's more feasible in the near term," said an analyst at ICEA Securities.
An official at Hong Kong's Economic Development and Labour Bureau said a tie-up would be a "commercial decision by the companies" but noted that the Bureau doesn't comment on rumors. A bigger hiccup will likely be the approval of CNAC and Chinese conglomerate CITIC Pacific Ltd. (0267.HK), which has stakes in both Cathay and Dragonair.
The Air China story is different, as the British-run Swire would probably end up with a substantial stake in the mainland airline, and that would be harder to get off the ground.
"The chance that Cathay would buy Dragonair is very high," SHK Financial analyst Gary Zhang said. "But it's hard to see how a British-run firm could become a major stakeholder in one of China's largest three airlines."
Spokespersons for both China's State-owned Assets Supervision and Administration Commission of the State Council and the Civil Aviation Administration said Wednesday that any talks between Air China and Cathay would be the firms' own businesses.
An airline consultant said that Swire itself could be part of the obstacle to a deal that sees Cathay under Air China's control.
"China has never wanted to have a British-controlled airline in Hong Kong, its backyard, and has been pushing to change this even before the handover (to Chinese rule of Hong Kong) in 1997," the airline consultant said. "But Swire has been reluctant to give up control of Cathay even for more China access."
Still, most analysts agree both sides would gain from such a link.
Swire gets to expand Cathay's network into one of the world's fastest growing travel markets, and Air China, "can benefit from this improved efficiency and western-style management," the ICEA Securities analyst said. Air China, which has ambitions to be a major international carrier, also gets a hold on Cathay's long-haul routes.
At the moment, about 60% of revenue of the mainland's carrier come from domestic flights.
-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343; [email protected] and Ruby Chan, [email protected]
(Sai Man contributed to this article)
-Edited by Costas Paris
Message to staff from the Chairman
Dear all,
We have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair. We would like to reiterate that Swire Pacific remains committed to being the principal shareholder in Cathay Pacific for the long term.
For more information, please refer to the company's statement to the Stock Exchange of Hong Kong.
David Turnbull
Chairman
Joint clarificatory announcement to the Hong Kong Stock Exchange
This clarificatory announcement is made at the request of the Hong Kong Stock Exchange. Swire Pacific and Cathay Pacific have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair. Cathay Pacific and Air China have made progress in exploring opportunities for further cooperation, including in relation to the Hong Kong-China aviation market, under the terms of the MOU dated 20 October, 2004. Such cooperation discussions necessarily involve Dragonair. However, there are currently no agreements between Air China and Cathay Pacific in relation to Dragonair. Swire Pacific remains committed to being the principal shareholder in Cathay Pacific for the long term and does not intend to do anything which would require a general offer to be made for the shares of Cathay Pacific under the Hong Kong Code on Takeovers and Mergers. In addition, Swire Pacific does not intend to become the principal shareholder of Air China. The board of Cathay Pacific has not received an approach from any person which might lead to a general offer being made for its shares.
This clarificatory announcement is made at the request of the Hong Kong Stock Exchange.
Swire Pacific and Cathay Pacific have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair.
On 20 October, 2004, Cathay Pacific and Air China announced that they had entered into the MOU, which envisaged a strategic investment by Cathay Pacific in Air China and future cooperation between them. In December, 2004, Cathay Pacific acquired a 10% interest in the share capital of Air China when Air China’s shares were listed on the Hong Kong Stock Exchange. This acquisition was the subject of announcements by Cathay Pacific dated 21 November, 2004 and 15 December, 2004 and a circular to its shareholders dated 30 December, 2004.
The MOU set out the framework for discussing, among other things, the objective of exploring the opportunities for developing a close partnership and cooperation between the aviation and related businesses of Cathay Pacific and Air China in Hong Kong and Mainland China. Cathay Pacific and Air China have made progress in exploring opportunities for further cooperation, including in relation to the Hong Kong-China aviation market, under the terms of the MOU. Such cooperation discussions necessarily involve Dragonair. However, there are currently no agreements between Air China and Cathay Pacific in relation to Dragonair.
Swire Pacific, which holds 46.5% of the shares in Cathay Pacific, is committed to being the principal shareholder of Cathay Pacific for the long term and does not intend to do anything which would require a general offer to be made for the shares of Cathay Pacific under the Hong Kong Code on Takeovers and Mergers. In addition, Swire Pacific does not intend to become the principal shareholder of Air China. The board of Cathay Pacific has not received an approach from any person which might lead to a general offer being made for its shares.
By order of the Boards of Swire Pacific and Cathay Pacific
Dear all,
We have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair. We would like to reiterate that Swire Pacific remains committed to being the principal shareholder in Cathay Pacific for the long term.
For more information, please refer to the company's statement to the Stock Exchange of Hong Kong.
David Turnbull
Chairman
Joint clarificatory announcement to the Hong Kong Stock Exchange
This clarificatory announcement is made at the request of the Hong Kong Stock Exchange. Swire Pacific and Cathay Pacific have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair. Cathay Pacific and Air China have made progress in exploring opportunities for further cooperation, including in relation to the Hong Kong-China aviation market, under the terms of the MOU dated 20 October, 2004. Such cooperation discussions necessarily involve Dragonair. However, there are currently no agreements between Air China and Cathay Pacific in relation to Dragonair. Swire Pacific remains committed to being the principal shareholder in Cathay Pacific for the long term and does not intend to do anything which would require a general offer to be made for the shares of Cathay Pacific under the Hong Kong Code on Takeovers and Mergers. In addition, Swire Pacific does not intend to become the principal shareholder of Air China. The board of Cathay Pacific has not received an approach from any person which might lead to a general offer being made for its shares.
This clarificatory announcement is made at the request of the Hong Kong Stock Exchange.
Swire Pacific and Cathay Pacific have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair.
On 20 October, 2004, Cathay Pacific and Air China announced that they had entered into the MOU, which envisaged a strategic investment by Cathay Pacific in Air China and future cooperation between them. In December, 2004, Cathay Pacific acquired a 10% interest in the share capital of Air China when Air China’s shares were listed on the Hong Kong Stock Exchange. This acquisition was the subject of announcements by Cathay Pacific dated 21 November, 2004 and 15 December, 2004 and a circular to its shareholders dated 30 December, 2004.
The MOU set out the framework for discussing, among other things, the objective of exploring the opportunities for developing a close partnership and cooperation between the aviation and related businesses of Cathay Pacific and Air China in Hong Kong and Mainland China. Cathay Pacific and Air China have made progress in exploring opportunities for further cooperation, including in relation to the Hong Kong-China aviation market, under the terms of the MOU. Such cooperation discussions necessarily involve Dragonair. However, there are currently no agreements between Air China and Cathay Pacific in relation to Dragonair.
Swire Pacific, which holds 46.5% of the shares in Cathay Pacific, is committed to being the principal shareholder of Cathay Pacific for the long term and does not intend to do anything which would require a general offer to be made for the shares of Cathay Pacific under the Hong Kong Code on Takeovers and Mergers. In addition, Swire Pacific does not intend to become the principal shareholder of Air China. The board of Cathay Pacific has not received an approach from any person which might lead to a general offer being made for its shares.
By order of the Boards of Swire Pacific and Cathay Pacific
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"Cathay pacific has not recieved an approach that might lead to a general offer for it's shares"...........................Nicely worded, doesn't mean that Swires ain't though !!! This has been in the wind for some time and no doubt as always they will play things very close to the chest till they are ready to announce things......................................
As for keeping brand names and "Seperate identities" I agree air China & Cathay would remain as seperate identities but no doubt Dragonair would be swallowed by Cx..................who needs two sets of managers ??? Two headquarters ???, cutting costs is the name of the game, why run two AOC's when you can have one ??? Why run two companies when one would suffice...............................
No doubt they have lots of green paint at HAECO !!!!
As for keeping brand names and "Seperate identities" I agree air China & Cathay would remain as seperate identities but no doubt Dragonair would be swallowed by Cx..................who needs two sets of managers ??? Two headquarters ???, cutting costs is the name of the game, why run two AOC's when you can have one ??? Why run two companies when one would suffice...............................
No doubt they have lots of green paint at HAECO !!!!
The Reverend
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South China Morning Post article, March 17.
Thursday, March 17, 2005
AVIATION
Air China rules out Cathay Pacific takeover
AGENCE FRANCE-PRESSE in Beijing
Next Story
--------------------------------------------------------------------------------
Updated at 12.52pm:
National carrier Air China on Thursday said it had no intention of acquiring a controlling stake in Hong Kong’s leading airline Cathay Pacific, dismissing reports of a merger.
“There is currently no agreement or arrangement between Air China, CNAC and Cathay Pacific which is discloseable under the Listing Rules,” Air China said in a statement to the Hong Kong Stock Exchange, where it is listed.
“In particular, Air China has no intention to acquire a controlling equity interest in Cathay Pacific.”
Air China also said that its corporate parent, China National Aviation Holding (CNAC), intends to remain its controlling shareholder.
The statement followed a report that Air China would take over Cathay Pacific while the Hong Kong airline’s British parent Swire Pacific would then take a large stake in the enlarged mainland carrier.
The report said the tie-up would see Hong Kong’s second airline, Dragonair, taken over first by Cathay Pacific and in turn folded into the new company.
In a joint statement late on Wednesday, Cathay Pacific and Swire also denied the report.
Cathay Pacific shares jumped nearly 5.0 per cent to $HK15.00 on the report on Wednesday while Air China was up 3.5 per cent at $HK2.925 as analysts said such a tie-up could make the new combined entity a powerful player in the industry.
The mainland is one of the world’s fastest growing aviation markets and any such merger would be an industry turning point with implications for airlines worldwide, the Sydney-based Centre for Asia Pacific Aviation (Capa) said.
“A combination of Air China, Cathay and Dragonair would have sufficient impact to tilt not only the regional aviation balance, but also the global airline industry,” it said in a statement.
Thursday, March 17, 2005
AVIATION
Air China rules out Cathay Pacific takeover
AGENCE FRANCE-PRESSE in Beijing
Next Story
--------------------------------------------------------------------------------
Updated at 12.52pm:
National carrier Air China on Thursday said it had no intention of acquiring a controlling stake in Hong Kong’s leading airline Cathay Pacific, dismissing reports of a merger.
“There is currently no agreement or arrangement between Air China, CNAC and Cathay Pacific which is discloseable under the Listing Rules,” Air China said in a statement to the Hong Kong Stock Exchange, where it is listed.
“In particular, Air China has no intention to acquire a controlling equity interest in Cathay Pacific.”
Air China also said that its corporate parent, China National Aviation Holding (CNAC), intends to remain its controlling shareholder.
The statement followed a report that Air China would take over Cathay Pacific while the Hong Kong airline’s British parent Swire Pacific would then take a large stake in the enlarged mainland carrier.
The report said the tie-up would see Hong Kong’s second airline, Dragonair, taken over first by Cathay Pacific and in turn folded into the new company.
In a joint statement late on Wednesday, Cathay Pacific and Swire also denied the report.
Cathay Pacific shares jumped nearly 5.0 per cent to $HK15.00 on the report on Wednesday while Air China was up 3.5 per cent at $HK2.925 as analysts said such a tie-up could make the new combined entity a powerful player in the industry.
The mainland is one of the world’s fastest growing aviation markets and any such merger would be an industry turning point with implications for airlines worldwide, the Sydney-based Centre for Asia Pacific Aviation (Capa) said.
“A combination of Air China, Cathay and Dragonair would have sufficient impact to tilt not only the regional aviation balance, but also the global airline industry,” it said in a statement.
Another week passes without news..................................
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Thursday 31 March
CX rules out merger talks
Six papers carried a Reuter newswire interview with Chief Operating Officer Tony Tyler, who clarified that CX has no current plans to take over or merge with Dragonair.
CX rules out merger talks
Six papers carried a Reuter newswire interview with Chief Operating Officer Tony Tyler, who clarified that CX has no current plans to take over or merge with Dragonair.
