Air China (CA, Beijing Capital) is considering lifting its 29.99% stake in Cathay Pacific (CX, Hong Kong International), according to Bloomberg. The Chinese majority-state-owned airline has previously talked about buying additional Cathay Pacific stock but never actioned plans. However, Air China is now reportedly keen to tap into rebounding traffic through Hong Kong to diversify and improve its own revenue streams.

The report says Air China has made no decisions, but discussions on the subject, including how to finance it, have restarted. Bloomberg cites people familiar with the matter. Air China is posting losses - it expects to post a loss of CNY1.3 billion yuan (USD180.65 million) for calendar 2023, while Cathay Pacific is preparing to soon post its best financial results in 14 years.

Cathay's top shareholder remains Swire Pacific Ltd, which has a 45% stake in the airline. Air China is Cathay's second biggest shareholder, while Qatar Airways (QR, Doha Hamad International) holds approximately 10% and the remainder trades on the Hong Kong Stock Exchange. Swire told ch-aviation it remained "completely committed" to Cathay Pacific.

Air China has a long-standing interest in Cathay Pacific, lifting its 17.5% stake to 29.99% in 2009. As a result, Air China now has four seats on Cathay's board. The current occupants of those board seats include Feng Xiao, also Air China's Chief Financial Officer; Yuquan Sun, also a member of the Standing Committee of the Communist Party Committee of Air China; Chongxian Ma, who is also the President and Deputy Secretary of the Communist Party Committee of Air China; and Mingyuan Wa, who serves as the President, Director and Vice Chairman of Air China. All four gentlemen are non-executive directors at Cathay Pacific.

Cathay Pacific flies to 91 airports in 32 countries with 188 aircraft and an additional 63 on order. Air China services 198 airports in 42 countries with a 517-strong fleet, including another 104 on order. The report did not say by how much Air China was looking to increase its stake, who it would acquire the stock from, and what its future plans were for Cathay Pacific if it was to start challenging Swire's majority holding.

ch-aviation has contacted Air China and Swire for comment.