CX and Swire Chairman Media Statement

Media statement by Christopher Pratt Chairman, Swire Pacific and Cathay Pacific Airways

Good afternoon, and thank you all for coming.

You will by now have seen the Stock Exchange announcement by Swire Pacific, Air China, CITIC Pacific and Cathay Pacific about a change in shareholding in Cathay Pacific.

In brief, CITIC Pacific has sold a 12.5 per cent shareholding in Cathay Pacific to Air China and a 2 per cent shareholding in Cathay Pacific to Swire Pacific.

This brings Air China's stake in Cathay Pacific to just under 30 per cent, and increases Swire Pacific's stake to just under 42 per cent.

Both Swire Pacific and Air China are buying as much of the CITIC shareholding as they can without triggering a requirement under the Hong Kong Takeovers Code to bid for the whole of Cathay Pacific.

I believe this confirms our two largest shareholders' full and ongoing support for Cathay Pacific and its long term future as one of the world's great airlines. This is particularly pertinent at a time when the aviation industry is under such enormous pressure worldwide.

As chairman of both Swire Pacific and Cathay Pacific, I want to make two important points about this new share structure:

First, Swire Pacific and Cathay Pacific welcome the new shareholding arrangement as a strengthening of the strategic partnership that already exists between Cathay Pacific and Air China.

Second, Swire Pacific regards its shareholding in Cathay Pacific as a strategic long term investment. I believe the acquisition of a further two per cent at a cost of just over $1 billion underlines this point.

I want to be clear about this: it remains the firm intention of Swire Pacific to remain the single largest shareholder in the airline, as indeed we have been for the past 60 years.

As we have made plain many times in the past, Swire Pacific is wholeheartedly committed to the long term development of the aviation industry in Hong Kong and on the Mainland.

I think it is fair to describe the increase in shareholding by Swire Pacific and Air China as a natural development arising from the share realignment three years ago which resulted in cross shareholdings between Air China and Cathay Pacific, and Dragonair becoming a wholly-owned subsidiary of Cathay Pacific.

We considered the likelihood then that Air China subsequently might wish to increase its stake, and we were comfortable with that possibility.

And as CITIC Pacific has stated today, this disposal is in keeping with CITIC Pacific's plan to focus on its major businesses.

I would like to pay a very sincere tribute to CITIC Pacific.

They have been very solid and supportive investors in Cathay Pacific for 22 years; we have been together during two decades of impressive and exciting growth for the airline.

I would like to say a very public "thank you" to our partners from CITIC for the wise counsel and support they have given Cathay Pacific over the years.

I hope they have found their investment in the airline as rewarding as we have.

In this context, I was delighted to see that chairman Chang Zhenming said today that, and I quote:

"CITIC Pacific has been honoured to be a large shareholder of Cathay Pacific for many years, during which time the companies have enjoyed a very positive relationship."

I am happy to say that those sentiments are wholeheartedly reciprocated.

Returning to today's announcement, I think it is clear that notwithstanding the much valued contribution CITIC Pacific has made over the years, the new shareholding structure will significantly strengthen the existing partnership between Swire Pacific, Cathay Pacific, Air China and Dragonair, which is and will remain of key importance to the Cathay Pacific Group.

While I confidently expect our strategic partnership with Air China to continue to grow, I would stress that the new shareholding will not mean any change in the current strategy and operational and financial management of Cathay Pacific.

But I do expect to see more operational co-operation, the development of our code share arrangements, personnel training and the sharing of best practices, of which both airlines have much to offer each other.

Finally, I would just like to say that Cathay Pacific looks forward to working even more closely with Air China to leverage the opportunities that will arise from the strengthening of the ties between two of the world's great international airline brands.

We are now happy to take your questions.