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SCMP Reporter

Stock market-bound Air China, the mainland's flagship carrier, will hold 69 per cent of Hong Kong-listed China National Aviation Company (CNAC).

China National Aviation Corporation (CNACG) has transferred its stake in CNAC as a capital contribution to the joint stock holding company set up  last month to be Air China's listing vehicle, CNAC announced through the stock exchange yesterday.

Sources  said the injection was done to give Air China's proposed US$500 million to $600 million international initial public offering later this or next year a more attractive valuation.

A provider of aviation-related services such as airline operations, airport ground handling and logistics, CNAC owns 43 per cent of Hong Kong Dragon Airlines among others.

In exchange for the equity interest in CNAC, CNACG has become a 22.5 per cent shareholder in Air China, which has a registered capital of 6.5 billion yuan.

China National Aviation Holding (CNAH) will own the rest of Air China, whose assets include a fleet of 136 aircraft serving 69 domestic and 34 international destinations.

The restructuring has established Air China as the principal passenger and air cargo transport unit of CNAH, which  the central government created in  2002  in an effort to consolidate the fragmented mainland civil aviation industry into three airline groups.

CNAH encompasses  Air China, CNAC and China Southwest Airlines.

Air China has obtained a waiver from the Hong Kong Securities and Futures Commission from making a mandatory cash offer under the takeover code for the CNAC shares it does own, the listed company said in the statement.

CNAC is 31 per cent owned by public investors.



Air China gets 69pc stake in CNAC