[Olneyflyer]

I read in social media today that Cathay Pacific are thinking of leaving Oneworld and that they are potentially being bought by Air China and moved into the Star Alliance group. Is there any truth in this? Cathay are my number one airline when I travel around Asia and I will miss them if the above is true. The report also stated that China Eastern would replace them within Oneworld.

[AndrewinHK]

Air China is reportedly looking to increase its stake in CX, this news came from Bloomberg who reported Air China has sounded out lenders to secure financing. The question remains how will they do this, Swire has repeatedly said it has no interest in reducing its stake, so assuming that is still the case, Air China could look to buy Qatar’s roughly 10% holding, or acquire some of the free-floating shares. Any talk of alliance changes I think is filler for a news piece, Air China is mostly interested in Cathay because it is a more profitable business, and Air China is massively loss-making. Air China already owns roughly 30% of CX and CX roughly the same amount in Air China.

[cwoodward]

“Air China is reportedly looking to increase its stake in CX “is not new or even factually correct.

THIS NON NEWS gets repeated amplified and inflated from time to time in various forms but has no logic particularly as Qatar is not reportedly a seller and at least 6% of the ‘floating” shares are held by interests close to John Swire and Sons who hold a 45% shareholding.
Controlling shareholder Swire have oft stated that they are not a seller.

[AlanOrton1]

It seems more likely CA will increase their stake in CX first and foremost, over and above any takeover or moving of alliance.
The latter two appear to be speculation, the part about CA looking to increase their holding in CX seems potentially more reputable.
Whether or not they do…

[AndrewinHK]

Cwoodward, it is being reported, and the market reacted to the headlines with CX stock yesterday gaining +3.07%, I assume Bloomberg and market participants have more information on this matter than forum posters.

[cwoodward]

Yes and No Andrew.

I have met the journalist who broke the story from his days at SCMP and he is very solid and experienced. So yes there is some noise re CA . However this is not the first time that I have heard this CA story and he seems to be the only original source.

I just don’t see profitable Swire as a willing seller or loss making and indebted Air China as a major buyer. Nor do I see the mainland government forcing the issue if only because there seems little point.

Although it would of course be a very different story if Swire were indeed a willing seller. However if that were the case it would I believe be a sale of their total controlling 45% + shareholding which seems unlikely and too costly for CA

Thus I am sceptical particularly as there has been no response from any of the parties mentioned and Qatar have been previously reported as stating clearly that they are not a seller.
Its general known that CX owns around 20% of CA and CA 29% of Cathay thus it seems possible that IF there is any move it would be along these lines.

3 users thanked author for this post.

Nicholas Bacon, Olneyflyer, AndrewinHK

[sparkyflier]

Personally I can see this happening at some stage and maybe not in the distant future – CX moving to Star to be closer to Air China. It is all about politics and control. As an outsider all I see is Beijing wanting to reduce what HK was/is or what it used to be/have. I do not want to get too political but I am sure you can see between the lines. The Beijing Gov will find a way to make it happen.

Back to the alliance focus, a few weeks ago I started a thread discussing now that Oneworld had reached its 25th anniversary, what new members there might be and what swaps/moves there might be. I was thinking to suggest CX moving to Star but think I was short for time and wanted to see what others thought or would raise as options.

CX have founding member status and would not be chuffed to see China Southern join (it would not be China Eastern), but them leaving could open that door, and Taiwan’s new airline Starlux being another potential recruit.

Star, Skyteam and Oneworld alliances – new members and any defections?

QR and BA already have close relationships with the huge carrier that is China Southern- surely one of the very biggest in the world?

[cwoodward]

There is much being over-read into this Bloomberg report (the only original source being this news wire report that said very little of substance.

Given that there is truth in the only original part of the report that is that ‘Air China is ‘looking’ at its shareholding in CX’. This is likely true as far as it goes which is not very far. Everything else is pure conjecture and titillating speculation.

The China Southern story emerges every couple of years this however is a very unlikely scenario. I was told and have read some time ago that founding members of OW have a veto that can be advanced to prevent a direct competitor from joining – CS is a very direct competitor of Cathay Pacific.

Here’s a perhaps more likely scenario – Air China joining OW

[Author]

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