Shanghai Airport Authority, Shanghai International Airport Co., Ltd., Air China and Cathay Pacific Establish Airport Ground Handling Joint Venture in Shanghai

Shanghai Airport Authority, Shanghai International Airport Co., Ltd., Air China Limited and Cathay Pacific Airways today announced the establishment of a joint venture company in Shanghai for the provision of airport ground handling services at Shanghai Pudong International Airport and Shanghai Hongqiao International Airport.

The joint venture company - Shanghai International Airport Services Co., Limited - will be 41% owned by Shanghai International Airport Co., Ltd and 10% by Shanghai Airport Authority which is the majority shareholder of Shanghai International Airport Co., Ltd. Air China and Cathay Pacific's wholly owned subsidiary Hong Kong Airport Services Limited ("HAS") will hold 24% and 25% of the joint venture company respectively.

Air China and HAS will contribute RMB86.4 million and RMB90 million in cash to the registered capital of the joint venture company for their respective 24% and 25% shareholding. Cathay Pacific and HAS will provide strategic management support to the joint venture company.

Shanghai Airport Authority and Shanghai International Airport Co., Ltd. will inject cash and their existing ground service equipment into the joint venture company as their contributions in kind in respect of their respective 10% and 41% shareholding in the joint venture company.

Shanghai Airport Authority and Shanghai International Airport Co., Ltd will facilitate to switch their existing airport ground handling services contracts, including those in respect of Cathay Pacific and its sister airline Dragonair, to the joint venture company. Air China will also transfer its relevant ground handling services business to the joint venture company at an appropriate time.

The existing ground handling services staff of Shanghai Airport Authority and Shanghai International Airport Co., Ltd. will be transferred to the new joint venture company to ensure the continuity of operations at both Pudong and Hongqiao airports.

Subject to approval by the relevant Chinese government authorities, the joint venture company is expected to commence operations in the third quarter of 2012.

The joint venture shareholders of Shanghai International Airport Services Co., Limited said: "The joint venture company established by Shanghai Airport Authority, Shanghai International Airport Co., Ltd, Air China and Cathay Pacific will leverage on the resources and management expertise of each of the shareholders to enhance the hub operations and efficiency of ground handling services at the two Shanghai airports, providing a solid platform for developing Shanghai into a key aviation hub in the Asia Pacific region.

"Using the extensive ground handling management experience of its shareholders, the joint venture company will deliver improved services to the airlines and passengers flying in and out of Shanghai airports, catering for the increasing demand for air passenger and cargo services in Shanghai and creating economic benefits for the whole community."

(More details of the joint venture are available through the Stock Exchange announcement at www.airchina.com or www.cathaypacific.com).