The last piece of the puzzle is now in place for China Cargo Airlines.

Reports out of Asia indicate that Singapore Airlines Cargo signed an agreement today to buy a 16% stake in China Cargo Airlines for US$50 million. This follows a similar agreement signed last week in which Concord Pacific Ltd (a company affiliated with Taiwan-based EVA Airways) took a 16% share.

 

China Cargo was originally the all-cargo joint venture of China Eastern Airlines,  and Chinese shipping giant COSCO. But in 2010 China Eastern acquired local competitor Shanghai Airlines, and with that came Shanghai Airlines’ majority share of all-cargo carrier Shanghai Airlines Cargo International Co. (SACIC) in which EVA held a 45% stake. This was followed by a government decision that transferred majority control of Great Wall Airlines from a Beijing-based aerospace company to China Eastern. Singapore Airlines Cargo (along with one of the investment arms of the Singapore government) held 49% of Great Wall.

 

At this point, China Eastern held majority control of three separate all-cargo joint ventures, and rather than let them continue as they were, decided to combine them into a single carrier. This is a fairly obvious decision, but one which could not be carried out without the cooperation of three separate companies — COSCO, Singapore Airlines, and EVA Airways — all of which were economically more powerful than China Eastern itself.

 

However, all three have now bought into the idea, and agreed to a plan that will see China Cargo Airlines become a 4-way joint venture in which Singapore Airlines Cargo and EVA Airways will hold 16% each, COSCO will hold 17%, and China Eastern will hold 51%. The deal reportedly will see China Cargo’s registered capital rise from $142 million to $450 million. China Cargo is in the process of replacing its six MD-11Fs with 777Fs, and when that is complete, the combined 21-unit fleet of the three formerly independent carriers will include six 747-400ERFs/BCFs, six 777Fs, four MD-11Fs, three A300-600Fs, and two 757-200PCFs – which will make China Cargo a significant competitor in the main-deck freight arena.

 

 

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