More than $320 million is being invested in Air China Cargo by its shareholders to make changes to its fleet, reduce its operating costs and develop its charter flight business with China Postal Airlines.
Air China Cargo’s shareholders are Air China, Cathay Pacific China Cargo Holdings and Fine Star Enterprises, based in the British Virgin Islands. They have owned 51 per cent, 25 per cent and 24 per cent, respectively, of the shares in Air China Cargo.
The US dollar value of the new investment in the freight carrier is $324,936,000, but their share of ownership will not change. The investment follows an audited net loss for Air China Cargo, for the year ending 31 December 2013, of 349 million renminbi ($56.7 million).
Air China Cargo, China Postal Airlines, Air China, Cathay and Fine Star were not available for comment about what reducing operating costs means. Air China Cargo saw its third Boeing 777-200 Freighter arrive in April, and the carrier has a further five 777F on order. The carrier’s fleet also includes Boeing 747-400 and Boeing 757.
While the carriers were not available for further comment, the Cathay Pacific Airways statement for stock exchanges states: “[It] will assist Air China Cargo to develop its cargo charter flight business with China Postal Airlines and to establish a sound and sustainable basis for the development of its overall business.”
In August 2013, Air China Cargo signed a cooperation agreement with China Postal Airlines to provide, by August 2015, four Boeing 757-200 Freighters to Postal Airlines on charter.
Air China is making the largest cash injection into Air China Cargo with a combined, cash contribution and, according to the joint statement, “an in-kind” contribution, of 1,020,000,000 renminbi.
Cathay is investing 500,000,000 renminbi and Fine Star, a further 480 million in the Chinese currency.
Loans the shareholders have made to Air China Cargo have amounted to 2,000,000,000 renminbi from Air China and a further 980,000,000 from Cathay and Fine Star.
