Air China considering CX acquisition (potential oneworld exit to *A?)

[skylabsea]

As reported by bloomberg and posted on FT, Air China (CA) is engaging advisors on potentially increasing their stake in Cathay Pacific (CX).
CA already owns just a hair under 30% of CX, so any increase in holdings will trigger mandatory takeover offer.
Swire (majority shareholder) has stated they do not plan to give up control of CX.
It has been speculated that if/when CA purchases CX, CX will exit oneworld and join star alliance instead.

Food for thought:
- is Swire's stance firm or is it just facade to get a better purchasing price?
- is CA going to be able to secure lending to complete the purchase?
- given Swire's portfolio/interests in mainland China, will CA be able to "persuade" Swire to sell CX below parity?
- this will be a huge loss to oneworld's Asia network if the purchase and (if CA decides against having CX remain) oneworld exit materialise, however,
- this may finally remove the barrier to China Southern joining oneworld given the proximity of their base in Guangzhou (CAN)

I am personally annoyed at the prospect of losing CX as an option on oneworld, as I have extensive plans based on their membership in oneworld.

 

[SYD]

Yes, I still like transiting and visiting HKG. I doubt that I would go out of my way to go via CAN….

But if Starlux joins OW, that might partially compensate things? Although they don’t fly to Oz yet nor the network of CX.

 

[Mwenenzi]

The Chinese govt will decide who owns what. This is not free enterprise.

Air China - Wikipedia

en.wikipedia.org

 

[jase05]

The Chinese govt will decide who owns what. This is not free enterprise.

Air China - Wikipedia

en.wikipedia.org

Bingo!
If CX does get integrated into the system and their product turns into the garbage that CA is then I wouldn’t bother flying with them but if they take over ownership and run it as a upmarket arm of CA then I’d fly with them

 

[tomlee1986]

The Chinese govt will decide who owns what. This is not free enterprise.

Air China - Wikipedia

en.wikipedia.org

I completely agree with this assessment... The HK government wants this airline dead in an attempt to shut down hkers from leaving HK to UK under BNO visa scheme!

 

[elanshin]

I suspect even if CA wants to do this (and the government), it'll be a very lengthy process (years) to get the hurdles complete.

Just look at how long KE and OZ are taking.

 

[tomlee1986]

I suspect even if CA wants to do this (and the government), it'll be a very lengthy process (years) to get the hurdles complete.

Just look at how long KE and OZ are taking.

it can be lengthy or quick depending on how CCP wants to take control of CX. Don't forget HK is NOT a land of rule of law anymore. It is rule by crazy man!

 

[elanshin]

it can be lengthy or quick depending on how CCP wants to take control of CX. Don't forget HK is NOT a land of rule of law anymore. It is rule by crazy man!

Has nothing to do with HK itself but the rest of the world.

CA would need regulatory approvals all over the world folding in CX and they need to be approved to do so in every country they operate in too.
That's whats holding KE and OZ up.

Of course CX can just stop flying everywhere or cease to exist as a brand but that would be an extremely drastic move.

 

[tomlee1986]

Has nothing to do with HK itself but the rest of the world.

CA would need regulatory all over the world folding in CX.
That's whats holding KE and OZ up.

Of course CX can just stop flying everywhere or cease to exist as a brand but that would be an extremely drastic move.

true but also the 2nd option is extremely likely scenario now!

 

[elanshin]

true but also the 2nd option is extremely likely scenario now!

I disagree with that sentiment.

That may have been the case 10-15 years ago, however China as a whole has learnt the value of "foreign" brands.
They're not going to demolish a brand that still have good foreign prestige and perception easily unless it's a last resort now.

Just look at all the different foreign badged Chinese company owned whitegoods and cars on the market. They tried pushing their own brands into the world and it's taking them a long time to gain any significant market share. Where as buying a foreign brand or repurposing it has yielded much better results.

I think one example is Fisher & Pykel where they kept the branding and marketing despite it being fully owned subsidiary of Haier. They even states that as Haier they struggled to get into the market but as F&P they had better brand perception.

 

[kamchatsky]

Has nothing to do with HK itself but the rest of the world.

CA would need regulatory approvals all over the world folding in CX and they need to be approved to do so in every country they operate in too.
That's whats holding KE and OZ up.

Of course CX can just stop flying everywhere or cease to exist as a brand but that would be an extremely drastic move.

Surely with CA taking over CX, they will keep CX as a separate airline given the goodwill to their brand name, even though the brand value has been dropping.

So, I cannot see why there would be that many regulatory approvals required. I understand the KE/OZ merger would lead to almost a monopoly to fly to Korea, but to fly to China, you still have MU, CZ, plus many others.

 

[tomlee1986]

I disagree with that sentiment.

That may have been the case 10-15 years ago, however China as a whole has learnt the value of "foreign" brands.
They're not going to demolish a brand that still have good foreign prestige and perception easily unless it's a last resort now.

Just look at all the different foreign badged Chinese company owned whitegoods and cars on the market. They tried pushing their own brands into the world and it's taking them a long time to gain any significant market share. Where as buying a foreign brand or repurposing it has yielded much better results.

I think one example is Fisher & Pykel where they kept the branding and marketing despite it being fully owned subsidiary of Haier. They even states that as Haier they struggled to get into the market but as F&P they had better brand perception.

i know where you are coming from... but i feel this is actually the reverse 10-15 years ago when the west are friendly with China, but after what we saw since 2019, and the deteriorating relations. It is simply impossible. What China wants to do now is to destroy CX brand as quickly as possible, gobble it up as CA - to save CA, AND the most evil part is to CUT HKG LHR flights ASAP, TO STOP hkers from leaving under BNO visas or other lifeboats by the western world, thus achieving Berlin Wall 2.0!

Surely with CA taking over CX, they will keep CX as a separate airline given the goodwill to their brand name, even though the brand value has been dropping.

So, I cannot see why there would be that many regulatory approvals required. I understand the KE/OZ merger would lead to almost a monopoly to fly to Korea, but to fly to China, you still have MU, CZ, plus many others.

I value your optimism but I also disagree - what China wants to do is to gobble up CX, stop hkers from leaving under BNO visa by ending CX HKG LHR flights ASAP!

 

[kamchatsky]

i know where you are coming from... but i feel this is actually the reverse 10-15 years ago when the west are friendly with China, but after what we saw since 2019, and the deteriorating relations. It is simply impossible. What China wants to do now is to destroy CX brand as quickly as possible, gobble it up as CA - to save CA, AND the most evil part is to CUT HKG LHR flights ASAP, TO STOP hkers from leaving under BNO visas or other lifeboats by the western world, thus achieving Berlin Wall 2.0!

I value your optimism but I also disagree - what China wants to do is to gobble up CX, stop hkers from leaving under BNO visa by ending CX HKG LHR flights ASAP!

Why would this merger have to do with people leaving with BNO? BNO Passport is not recognised by HK government anyway regardless of the flight they take to go anywhere. They all have to leave with their HKSAR Passport.

I am sure that HKers can fly to UK via many ways regardless of passport that they hold, SQ, QR, JL comes to my mind ......

 

[tomlee1986]

Why would this merger have to do with people leaving with BNO? BNO Passport is not recognised by HK government anyway regardless of the flight they take to go anywhere. They all have to leave with their HKSAR Passport.

I am sure that HKers can fly to UK via many ways regardless of passport that they hold, SQ, QR, JL comes to my mind ......

The reason it is relevant is because too many hkers are using the current 5X CX daily service to LHR!! And to some people, they will NOT use SAR passport because they do NOT want to classify themselves as Chinese!

 

[kamchatsky]

The reason it is relevant is because too many hkers are using the current 5X CX daily service to LHR!! And to some people, they will NOT use SAR passport because they do NOT want to classify themselves as Chinese!

How is that even going to work in practice? Since they cannot even use BNO Passport to get the boarding pass when they check in at HKG. Even if they do OLCI, they won't be able to pass the initial departure gate check before immigration:

BN(O) passport changes explained

The Hong Kong Special Administrative Region Government announces the non-recognition of the British National (Overseas) (BN(O)) passport as a valid travel document and proof of identity.

www.news.gov.hk

If they use other nationalities' passports, then they do not need to get a BNO Visa in the UK anyway.

 

[tomlee1986]

How is that even going to work in practice? Since they cannot even use BNO Passport to get the boarding pass when they check in at HKG. Even if they do OLCI, they won't be able to pass the initial departure gate check before immigration:

BN(O) passport changes explained

The Hong Kong Special Administrative Region Government announces the non-recognition of the British National (Overseas) (BN(O)) passport as a valid travel document and proof of identity.

www.news.gov.hk

If they use other nationalities' passports, then they do not need to get a BNO Visa in the UK anyway.

they will only use it to exit HKG, but NEVER USE IT AGAIN... even arriving in UK border

 

[Buggbear]

The reason it is relevant is because too many hkers are using the current 5X CX daily service to LHR!

According to UK government sources there were 76,000 migrants from HK in 2020 and it is trending down. That's around 208 daily. Hardly enough to fill 1 plane even they all travel on CX. How many flights do you think there are daily from HK to UK direct or indirect?

I think it's time you should just get off your soap box and leave politics out.

 

[Danger]

According to UK government sources there were 76,000 migrants from HK in 2020 and it is trending down. That's around 208 daily. Hardly enough to fill 1 plane even they all travel on CX. How many flights do you think there are daily from HK to UK direct or indirect?

I think it's time you should just get off your soap box and leave politics out.

Isn't there a difference between what tomlee1986 said and the stats? I don't think the member was suggesting that five planeloads of Hong Kongers are migrating every day to the UK.

 

[Buggbear]

Isn't there a difference between what tomlee1986 said and the stats? I don't think the member was suggesting that five planeloads of Hong Kongers are migrating every day to the UK.

If you read between the lines that is exactly what he meant. DO read all his previous post.
Quote"The HK government wants this airline dead in an attempt to shut down hkers from leaving HK to UK under BNO visa scheme!" Unquote.
I know China bashing maybe fashionable but to suggest that they would destroy an airline to stop migration is purely conjecture bordering being ludicrous.
AND Swire is NOT controlled by the Chinese. If they sold CX, it would only be a commercial decision. What CA will do to CX is anybody's guess. Whatever the outcome, you do not have to fly CA or CX.

 

[tomlee1986]

If you read between the lines that is exactly what he meant. DO read all his previous post.
Quote"The HK government wants this airline dead in an attempt to shut down hkers from leaving HK to UK under BNO visa scheme!" Unquote.
I know China bashing maybe fashionable but to suggest that they would destroy an airline to stop migration is purely conjecture bordering being ludicrous.
AND Swire is NOT controlled by the Chinese. If they sold CX, it would only be a commercial decision. What CA will do to CX is anybody's guess. Whatever the outcome, you do not have to fly CA or CX.

this is not because it is fashionable but sadly it is fact now days with the news of Article 23 about to be debated - the demand of the flights is extreme... and I dont like to talk politics here but it is sadly true as to CX - what makes you think the chinese government wont want to take over the airline and merge it with CA?