Air China Cargo Commences Operation as a Joint Venture

Air China Cargo Co., Ltd. (ACC) has commenced operation as a joint venture cargo carrier between Air China Limited and Cathay Pacific Airways Limited. An opening ceremony was held tonight in Beijing to commemorate this milestone development.

Under the joint venture, Air China has a 51% equity interest in ACC while the Cathay Pacific Group has a 25% equity interest together with a 24% economic interest.

There are seven directors on the ACC board. Four, including the Chairman, are appointed by Air China, while three, including the Vice Chairman, are appointed by the Cathay Pacific Group. The make-up of the ACC board and management team is designed to take full advantage of the complementary strengths of the two companies in terms of experience and expertise to prepare the joint venture for broad international growth.

With its principal operating base in Shanghai, the joint venture will soon have a fleet of 12 Boeing 747-400s freighters.

China's continued economic growth in recent years has helped turn the country into one of the world's fastest-growing air cargo markets. Faster fleet development has been enabled through the joint venture, helping ACC to achieve economies of scale and consolidate its market position. Choosing Shanghai as its principal operating base ensures that ACC is well positioned to capture business opportunities out of the Yangtze River Delta region, which accounts for two-thirds of China's air cargo business. In addition, the cargo "belly space" provided through Air China's extensive domestic and international passenger network will also provide strong impetus to ACC's global business development.

As an extension of the strategic cross-shareholding relationship between Air China and Cathay Pacific, the joint venture helps raise the core competitiveness of ACC, facilitate the development of China's air cargo hub, and achieve greater social efficiency and corporate economic effectiveness.

ACC will fully capitalise on the brand advantages and management excellence of both Air China and Cathay Pacific to accelerate its internationalisation process, enhance its core competitiveness, achieve its mission of "creating value for customers, careers for staff, returns for shareholders, and wealth for the society", and its vision to become the "most preferred cargo carrier among China's customers". The goal is to develop ACC into a China-based air cargo airline with international competitiveness.

About Air China

Air China is China's national flag carrier, a Star Alliance member, and the airline partner to the 2008 Beijing Olympic Games. Air China is China's leading domestic carrier, a prominent global brand, a top 500 brand worldwide for four consecutive years, and one of the world's most profitable airlines in 2009 and 2010. It has controlling interests in Shenzhen Airlines and Air Macau and equity interests in Cathay Pacific and Shandong Aviation Group Co. Ltd. As of the end of 2010, Air China operated a fleet of 272 aircraft to 141 destinations worldwide.

About Cathay Pacific

Cathay Pacific is a Hong Kong-headquartered international airline, a founding member of oneworld and a world-renowned leading airline in network connectivity, service quality and profitability. Cathay Pacific has been running an all-cargo business for more than 30 years with tremendous operational and management experience. As of the end of 2010, Cathay Pacific operated fleet of 104 passenger aircraft and 24 Boeing 747 freighters to 141 destinations worldwide.

(From left)Party Secretary, Air China Cargo, Huang Bin; Director Marketing and Sales, Cathay Pacific, Mr Ruper Hogg; Assistant President, General Manager of Strategy and Development, Air China, Ms Zhang Yang; Chief Executive of Cathay Pacific Airways, Mr. John Slosar; President of Air China, Mr. Cai Jian Jiang; Chairman of Cathay Pacific Airways, Mr. Christopher Pratt; Chairman of China National Aviation Corporation, Mr Kong Dong; Party Secretary of Air China, Chairman of Air China Cargo Mr. Fan Cheng; Chief Operating Officer, Cathay Pacific, Vice Chairman Air China Cargo, Mr. Ivan Chu; Director Corporate Development, Cathay Pacific, Mr James Barrington; President, Air China Cargo, Yao Jun; and Chief Operating Officer, Air China Cargo, Titus Diu