Dragonair and Air China will next month integrate their mainland networks further by extending their code-sharing agreements to include Hangzhou and Wuhan cities. The deal, which takes effect on May 15, will see the budding partnership jointly promote and sell air transport services from Hong Kong to the two cities, bringing to seven the number of mainland routes on which the carriers have code-sharing arrangements. 'Our code-sharing relationship with Air China continues to deepen,' said chief executive Stanley Hui Hon-chung. 'Air China has an extensive distribution network on the mainland, making it easier for our passengers to buy tickets on the code-sharing services.' The carriers, with state-owned China National Aviation Corp as their single biggest shareholder, together will offer four flights a day to Hangzhou and two flights a week to Wuhan. Last month, they agreed to co-operate on their 14 daily flights to Beijing. A senior source at Swire Group last month said Dragonair was the target of a takeover bid by minority shareholder Cathay Pacific. The move was thought to be the first step in a possible larger cross-shareholding agreement that could see Swire, Cathay's controlling shareholder, invest in Air China. However, responding to comments on Hong Kong's competitive environment at an event sponsored by the American Chamber of Commerce yesterday, Cathay's chief operating officer Tony Tyler appeared to deny the reports. 'I don't know if anyone saw [Swire's] declaration to the stock exchange [on March 16]. It had words to the effect that, basically, it isn't going to happen,' he said. Dragonair has repeatedly referred queries on the matter to its shareholders. Escalating demand for leisure and travel services to the mainland drove passenger volumes for Hong Kong's No2 carrier up a comparative 16.4 per cent in the first quarter as it continued to expand its fleet. Dragonair carried 1.11 million passengers for the period, during which its cargo business also expanded rapidly. The airline carried almost 85,400 tonnes in the first quarter, up 22 per cent year on year. 'As expected, cargo saw a rebound in March following the Lunar New Year holiday period in February,' Mr Hui said. 'The momentum is expected to carry forward [during this month].'