Summary
- Air China is allegedly considering increasing its stake in Cathay Pacific.
- The potential deal stays in early stages with uncertain outcomes, though it could boost Air China’s profitability.
- If Air China acquires a controlling stake, Cathay’s membership within the oneworld alliance is perhaps in danger because of Air China being a part of the Star Alliance.
Air China is reportedly exploring the potential for increasing its stake in Cathay Pacific to assume control of the Hong Kong-based carrier. This development has raised questions regarding Cathay Pacific’s future throughout the oneworld alliance, on condition that Air China is an element of the Star Alliance. Easy Flying has asked Cathay Pacific for a comment.
Is Air China taking control of Cathay Pacific?
In accordance with a report by Bloomberg, China’s flag carrier currently holds nearly a 30% stake in Cathay Pacific but is searching for to extend it as Cathay rebounds from setbacks brought on by the COVID-19 pandemic. The considerations are still in a really preliminary stage, and it’s unclear whether this might result in any deal. Nonetheless, the news reflects China’s deeper involvement in Hong Kong, an important financial hub and a gateway to mainland China.
Photo: Santi Rodriguez | Shutterstock
It’s price noting that this will not be the primary time Air China is considering increasing its stake in Cathay Pacific. Nonetheless, now, this might represent a big move for Air China because it seeks growth following difficult years. In accordance with the Bloomberg report, gaining control of Cathay Pacific would boost Air China’s profitability, which suffered in the course of the COVID-19 pandemic, leading to the near-complete halt of air travel for 3 years.
Over the past couple of years, Cathay Pacific has struggled as an airline. The carrier was initially impacted by unrest in Hong Kong. More recently, Hong Kong’s COVID-19 travel rules have meant a necessity for more passengers for the carrier. Nevertheless, the carrier is currently on the trail of economic and operational recovery.
![A Cathay Pacific A350 taking off.](https://static1.simpleflyingimages.com/wordpress/wp-content/uploads/2023/10/cathay-pacific-a350-taking-off-1.jpg)
Cathay Pacific Passes 20 Million Passengers In 2023
Having endured more challenges than most, Cathay Pacific is now focused on rebuilding its network because it optimistically heads towards 2024.
In February 2024, Cathay carried a complete of 1.7 million passengers, a rise of 66% in comparison with the identical period last yr. In 2023, the flag carrier of Hong Kong also announced its expectation of achieving its first profit in 4 years.
Air China is a state-controlled airline, whereas Cathay Pacific is owned by several firms, including Air China (30%), Swire Pacific (45%), and the Qatar Airways Group (10%).
Questions over Cathay’s alliance change
As media outlets cover this potential transaction, questions on the alliance change are gaining traction.
In accordance with View From the Wing, if Air China were to amass a controlling stake in Cathay Pacific, the airline’s future within the oneworld alliance can be uncertain, considering Air China’s affiliation with the Star Alliance.
Photo: JEERAPAN JANKAEW | Shutterstock
The oneworld alliance stands as one among the world’s most esteemed airline alliances. Unveiled in the UK in 1998 by its founding members—American Airlines, British Airways, Canadian Airlines International, Cathay Pacific, and Qantas—it has maintained its prestige within the aviation industry. In 2023, oneworld was named the perfect airline alliance for the eleventh consecutive yr by the 2023 Business Traveller Awards.
View From the Wing’s report suggests that there have been speculations that Cathay Pacific might join the Star Alliance, while China Southern, partly owned by each American Airlines and Qatar Airways, could take its place.
Star Alliance was founded in 1997 by five founding airlines, including United Airlines, SAS, Thai Airways, Air Canada, and Lufthansa.