Cathay/Air China all-cargo jv gets the green light from Beijing

Launch of the long-planned all-cargo joint venture of Cathay Pacific and Air China appears imminent. The Chinese government has finally granted approval, and although the startup date remains to be confirmed, it will reportedly be either 1 December 2010 or 1 January 2011. Under the joint-venture agreement, Cathay will buy a 49% stake in Air China’s cargo arm Air China Cargo. Cathay said it would fund its RMB 1.67 billion (US$244 million) investment “with the injection of four Cathay Pacific Boeing 747-400 Converted Freighters (BCFs) and two spare engines.” These four 747-400BCFs will be added to Air China Cargo’s existing fleet, which includes one 747-200F, six 747-400Fs (a mix of production units, BCFs, and BDSFs), and one Tu-204C. For its part, Cathay operates six 747-400Fs, twelve 747-400BCFs, and six 747-400ERFs. The joint venture will continue to operate from Air China Cargo’s current bases in Beijing and Shanghai, and Cathay has been careful in the past to point out in its public statements that the joint venture will be completely separate from, and compete with, its own Cathay Pacific Cargo business. However, it added that the two carriers “have the chance to work together, within the normal anti-trust parameters.”