Cathay Pacific is a symbol of Hong Kong. There are few companies as highly respected or brands as closely associated with our city. The airline vies for the title of the region's best, being hailed for its managerial expertise, quality of service and profitability. There is understandably unease in some quarters that the mainland carrier Air China will boost its stake to within a hair's breadth of making a takeover bid. Beijing-based Air China announced on Monday it would increase its shareholding in Cathay to 29.99 per cent by buying a 12.45 per cent stake from the Beijing-controlled Citic Pacific. Cathay's parent company, Swire Pacific, will lift its holding to 42 per cent by taking another 2 per cent of shares from Citic. Both companies will buy as much of Cathay as they can without triggering mandatory takeover offers. The sale raises the spectre of Cathay one day being a mainland-controlled firm. No state-owned airline on the mainland makes an operating profit. China Eastern's latest results are, like Cathay's, in the black because of hedging on fuel futures. The private, Shanghai-based Spring Airlines is one of the few operators across the border that is genuinely profitable. The key to viability is skilled management and a sound business model - which state airlines are still grappling to acquire. The 'one country, two systems' arrangement that assures Hong Kong's separate identity from mainland China guarantees the city its own flag carrier. Swire, a British company closely associated with Hong Kong's colonial roots, held majority ownership until 1996. That year, with the handover of Hong Kong's sovereignty to China looming, its interest in Cathay dropped below 50 per cent with the sale of a stake to Citic. The questions being raised then have re-emerged with Air China's boosted shareholding. A sharp dip in Air China's stock value yesterday highlighted concern about its finances. Its resources will be stretched to buy the agreed 491.9 million Cathay shares at the 11 per cent premium of HK$12.88 each. It has to be remembered, of course, that state companies can make financing deals with the government. With Hong Kong drawing ever closer to the mainland, it appears highly likely, if not inevitable, that Cathay will one day come under state control. When this may happen is a matter of guesswork; the financial instability of mainland airlines would seem to indicate that this could be later rather than sooner. Regardless, Cathay needs the mainland market for development and growth. Air China's moving closer to the airline will further help it with training and understanding of international standards and boost access to global routes. Swire is reluctant to lose control of Cathay. There would be a good deal of disquiet in Hong Kong if it did; mainland airlines are not highly regarded here. Their safety has improved immeasurably since the 1990s through strict government controls. Nevertheless, management skills and service fall short of the region's market leaders, Cathay, Singapore Airlines and Qantas. Acquiring Cathay is Air China's goal. From a business and operational perspective, its moving closer makes good sense. But it or any other company eyeing a controlling stake has to be careful. Damage to Cathay's standards, quality and reputation would be damage to Hong Kong.