A joint statement released yesterday by Cathay Pacific Airways and Air China and investors Swire Pacific, China National Aviation Co. and CITIC Pacific confirmed reports that "discussions are taking place about operational cooperation" between CX and Air China and "realignment of shareholdings" in the two airlines and Dragonair, the Hong Kong carrier owned jointly by CNAC (43.3%), CITIC (28.5%), Cathay (17.8%) and Swire (7.7%).There has been talk of Cathay's increasing its stake in Dragonair as it looks to build a stronger presence on the mainland, while Air China, in which CX owns 9.9%, leans toward joining the Star Alliance (ATWOnline, April 5).

"There is no agreement or arrangement which is discloseable under the Listing Rules," the statement said, adding that Swire intends to remain the principal shareholder in Cathay (46.8%), CNAC will retain controlling interest in Air China (69%; it also owns 43.3% of Dragonair), CITIC "may reduce" its 25.7% share in CX but plans to remain a "significant shareholder," and Air China has "no current intention" to privatize CNAC.

Negotiations between Air China and Cathay center on enhancing "cooperation between them in various business and operational areas," the statement said, while Dragonair will continue to "remain a principal airline" in Hong Kong and the Chinese mainland.