Cathay Pacific Airways shareholder CITIC Pacific is selling a 12.5% stake in the carrier to Air China.

It will also sell a 2% share to major Cathay Pacific stakeholder Swire Group. CITIC Pacific says the decision is in line with plans to focus on its main businesses.

Air China's Cathay stake will be acquired under a transaction worth HK$6.335 billion ($817 million).

This will take taking Air China's holding in the Hong Kong-based airline to just under 30% from its current level of 17.49%.

Swire Group's acquisition is worth HK$1.013 billion and takes its shareholding to nearly 42% from just under 40% previously.

The two agreements represent the same price, HK$12.88, per share in Cathay Pacific.

Air China and Cathay Pacific describe the changes as a "realignment" of the carriers' respective interests.

"This increase in shareholding will be useful in terms of boosting the international competitive strengths and brand value of Air China," says Air China, which says the agreement will "serve as a platform for further co-operation".

Cathay Pacific adds that it is looking to "leverage the opportunities" that will emerge from the "strengthening of the ties" between the airlines.

Swire Group says its increased shareholding demonstrates "full support" for Cathay Pacific. It adds that it "welcomes" the increased share of Air China.

Source: Air Transport Intelligence news