China Eastern Airlines (MU, Shanghai Hongqiao) signed a bellyhold cargo agreement with its sister company China Cargo Airlines (CK, Shanghai Hongqiao) in order to eliminate competition between the two subsidiaries of China Eastern Air Holding Company (CEA Holding), the carrier has announced in a Hong Kong stock market filing on March 1, 2018.
China Cargo Airlines would manage all cargo operations for China Eastern Airlines onboard its passenger aircraft if the partnership is approved by shareholders of the latter carrier.
The partnership would run through December 31, 2032. Under the terms of the agreement, China Eastern Airlines would pay the operation cost to China Cargo Airlines, proposed to be capped at CNY353 million (USD55.8 million) for 2019. In turn, China Cargo Airlines would pay the contractual fee to China Eastern Airlines, proposed to be capped at CNY4 billion (USD632.7 million) for 2019.
China Eastern Airlines announced in 2016 that it would exit dedicated freighter market by selling its entire shareholding in the Eastern Logistics consortium, which owns an 83% stake in China Cargo Airlines, to its parent, CEA Holding. The transaction was finalised on February 8, 2017.
According to the ch-aviation fleets module, China Cargo Airlines currently operates six B777-Fs and three B747-400(F), while China Eastern Airlines has a fleet of nearly 500 passenger aircraft and no dedicated freighters.
