Air China Sells 1.6% Cathay Pacific Stake for $170 Million

Air China has agreed to sell a 1.6% stake in Cathay Pacific, raising approximately HKD 1.3 billion (USD 169.5 million) as the Hong Kong-based carrier prepares for a major share buyback. The transaction involves 108,080,000 shares, priced at HKD 12.22 (USD 1.57) each, and is expected to be completed by January 8.

China’s flag carrier said it anticipates a pre-tax profit of CNY 182 million (USD 26 million) from the disposal after accounting for fees and transaction costs. Following the sale, Air China’s shareholding in Cathay Pacific will fall from 28.7% to 27.1%, maintaining its position as the airline’s second-largest shareholder.

The divestment is closely linked to Cathay Pacific’s planned off-market share buyback of 643,076,181 shares currently held by Qatar Airways. Once completed, the buyback will reduce Cathay Pacific’s issued share capital from 6.72 billion to 6.08 billion shares, reshaping the carrier’s shareholder structure.

Air China’s partial exit is designed to ensure that, after the Qatar Airways buyback, its own stake remains at 29.98%, just below the 30% threshold that would otherwise trigger a mandatory general offer under Hong Kong takeover rules. The move is therefore seen as a regulatory safeguard rather than a shift in strategic intent.

Following both the Air China sale and the proposed buyback, Swire Pacific—Cathay Pacific’s largest shareholder—is expected to see its ownership rise from 43.1% to 47.7%. Swire Pacific has applied for a waiver from the mandatory general offer requirement, which typically applies when a shareholder increases its stake by more than 2% within a 12-month period.

As part of the transaction, Air China has agreed to a 180-day lock-up on its remaining Cathay Pacific shares after completion of the sale. It has also refreshed its irrevocable undertaking to vote in favour of the buyback proposal at the forthcoming general meeting.

In a statement, Air China said it “remains an important strategic shareholder of Cathay Pacific” and continues to be optimistic about the airline’s long-term prospects. Cathay Group CEO Ronald Lam Siu-por echoed that view, describing the sale as “tactical” and stressing that it would not alter Air China’s status as a long-term strategic investor in the Cathay group.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com