Eva And SIA Buy Stake In China Eastern Cargo

China Eastern Airlines has decided on the new ownership structure of its cargo joint-venture.

China Cargo Airlines will be 51% owned by China Eastern, 17% by China Ocean Shipping (Cosco), and 16% by both Eva Airways’ Concord Pacific and Singapore Airlines’ SIA Cargo. Details of the ownership structure were revealed by Singapore Airlines on Monday.

Previously, China Cargo Airlines’ ownership structure had China Eastern and Cosco with a 70% and 30% ownership, respectively. But in more recent times China Eastern has developed closer links with SIA and Eva Air. China Eastern, for example, owns 51% of Shanghai Airlines Cargo, a business in which Eva Air owns 25%. China Eastern also owns 51% of another Shanghai-based cargo carrier, Great Wall Airlines, in which SIA Cargo owns 25%.

News reports in China, citing unnamed sources, say the new ownership structure at China Cargo Airlines will pave the way for a merger between it and Great Wall and Shanghai Airlines Cargo. An SIA spokesman says “it is business as usual at Great Wall” but there may be “a restructuring with China Cargo Airlines later on.”

China Cargo Airlines is taking in outside investors and boosting its registered capital to three billion yuan ($450 million) at a time when it faces new competition. Air China announced in November that its cargo joint-venture with Cathay Pacific Airways had received regulatory approval and will be based in Shanghai.

This new cargo carrier will operate dedicated freighters as well as make use of the belly-hold on Air China’s passenger aircraft, a key advantage, Cathay CEO Tony Tyler told Aviation Week in November. He says having access to the passenger belly-hold is crucial because it gives the cargo business a more comprehensive network into the smaller towns and cities in China. Many of the country’s export-orientated manufacturing factories have been in and around Shanghai and Guangzhou. But as these cities become more expensive, many of the factories are moving inland to the smaller cities and towns.

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