Air China Targets Private Money for $1.5 Billion Cargo Venture

(Bloomberg) -- Air China Ltd.’s parent is seeking private money for an air-cargo and logistics venture with planned total investment of 10 billion yuan ($1.5 billion) as part of Beijing’s mandate for state-owned firms to diversify their ownership.

China National Aviation Holding Co., the state-owned controlling shareholder of Beijing-based Air China, is among companies looking for private partners under the nation’s so-called mixed-ownership reform, according to a list of aviation-related projects published Thursday on the website of the Civil Aviation Administration of China.

The carrier is following in the footsteps of China Eastern Airlines Corp., which diversified holdings at its logistics and cargo business last year as part of government efforts to boost competitiveness of state companies. Air China previously said its parent had begun reforming its ownership structure by selling stakes in air cargo businesses to non-state investors.

Air China, which owns a stake in Cathay Pacific Airways Ltd., has a cargo joint venture with the Hong Kong-based company. The two airlines are in talks regarding attracting private investors for Air China and its parent’s cargo operations, Cathay Pacific’s China general manager Titus Diu said in March.

Last year, the parent of Shanghai-based China Eastern sold 45 percent of its cargo and logistics units for 2.26 billion yuan to four investors including Global Logistic Properties. Guangzhou-based China Southern Airlines Co. sold a minority stake to American Airlines Group Inc. for $200 million.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net

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