Air China Cargo, a joint venture between Air China and Cathay Pacific Airways, will receive CNY2 billion (US$322 million) in capital assistance from the two partners to upgrade its fleet, reduce its operating costs, and improve its performance.
The financial aid will also be used to help Air China Cargo develop its cargo charter flight business with China Postal Airlines.
The monetary assistance comes as the air freighter struggles against weak demand and high fuel prices, reports the South China Morning Post.
The infusion is seen to boost the freight company’s registered capital by 62 percent to CNY5.2 billion.
Air China, the flag carrier of China which has a 51 percent stake in the cargo airline, will contribute a little over CNY1 billion.
Cathay Pacific, with 49 percent of the equity, will provide CNY980 million, of which CNY480 million will be put up by Fine Star, the third investor in the freighter in which Cathay Pacific has an economic interest through loans it provides to Fine Star.
Air Cargo China was founded in December 2003 and became a joint business between Air China and Cathay Pacific in 2011. The partners had hoped to ride on the growing airfreight traffic between China and its trading partners, but the cargo airline has not been making any profit.
Air China Cargo reportedly posted an audited net loss of CNY349 million in 2013.
According to its website, as of April this year, Air Cargo China operates six B747-400Fs and three B777Fs.
Photo: Red Barnes
