Air China sells its majority stake in Air China Cargo

Air China announced that it will be selling its 51% stake in Air China Cargo to Capital Holding, due to uncertainties in the market.

It’s a bit of a strange manoeuvre as Capital Holding is a subsidiary of the state-owned China National Aviation Holding Corporation, which is a majority shareholder of Air China.

However, it reflects Air China’s decision to focus on passenger flights instead.

“With the increase in the income of residents, the upgrade of consumption structure, and the increasingly close economic tie among regions, the air passenger transport business maintains stable growth while possessing huge market potential,” the company announced.

“Following the disposal of Air China Cargo, the Company will further concentrate its resources on the air passenger transport business to increase the competitiveness thereof while mitigating the impacts of intensified competition in the cargo transportation market and uncertainty of international trade situation on the Company’s business performance.”

Competition in the air cargo sector is tight and customers increasingly expect end-to-end logistics solutions, while Air China Cargo currently only offers airport-to-airport. Air China said that transforming the business would be too costly.

Last year, Air China began to pursue mixed-ownership reforms as China looked to open up state-owned companies to the private sector, turning the state into stakeholder rather than operator.

(Source: Air Cargo News)