Why Did Air China Sell a 1.61% Stake in Cathay Pacific for $170 Million?

January 6, 2026 at 04:12 AM•2 min read

Air China sold a 1.61% stake in Hong Kong flag carrier Cathay Pacific for US$170 million to avoid triggering a mandatory general offer after a planned share buyback.

Key Points

1Air China sold 108.1 million shares, a 1.61% stake in Cathay Pacific, for approximately US$170 million.
2The sale was a 'tactical' move to reduce Air China's stake to 29.98%, avoiding a mandatory general offer (MGO) after Cathay Pacific's planned Qatar Airways stake buyback.
3Swire Pacific will remain the largest shareholder, and Air China will remain the second-largest strategic shareholder.
4The transaction occurs as Cathay Pacific projects strong financial results, with 2025 earnings expected to exceed 2024's HK$9.89 billion profit.

China's flagship carrier, Air China, has sold a significant minority stake in Hong Kong flag carrier Cathay Pacific. The airline disposed of 108.1 million shares. This represents approximately a 1.61% stake in the Hong Kong-listed company. The sale was valued at about HK$1.32 billion, or roughly US$170 million. The shares were sold via a tactical share placing agreement to institutional investors.

Following the news, Cathay Pacific shares saw a drop of about 2% on Tuesday. Air China will remain the second-largest shareholder in the airline.

Strategic Context and Regulatory Compliance

The disposal is considered a strategic move for regulatory compliance. It relates directly to Cathay Pacific’s planned buyback of a 9.57% stake. This stake was previously held by Qatar Airways. The buyback will increase the proportional stakes of the remaining major shareholders.

Avoiding a Mandatory General Offer

Air China’s stake would have risen above 30% after the buyback. Crossing this threshold would trigger a mandatory general offer (MGO). An MGO requires a buyer to bid for all remaining shares. The 1.61% sale ensures Air China's post-buyback holding settles at 29.98%. This level keeps the Chinese carrier just below the MGO trigger point.

Cathay Pacific CEO Ronald Lam described the share sale as "only tactical". He affirmed that Air China will remain a long-term strategic shareholder. The sale netted Air China a pre-tax profit of approximately RMB182 million.

Shareholder Structure and Financial Outlook

After the transactions are complete, Swire Pacific largest shareholder status will be maintained. Swire Pacific’s stake is expected to be around 47.65%. Air China’s reduced stake will sit at 29.98%. This structure maintains the current balance of power.

The news comes as Cathay Pacific shows strong recovery. The airline expects its 2025 full-year earnings to exceed the HK$9.89 billion profit reported in 2024. The airline is also celebrating eight decades of operations. As part of the celebration, the airline is bringing back its iconic green-and-white livery. This classic coloring will appear on one Airbus A350 and a Boeing 747 cargo jet. This move is expected to bring back fond memories for Hong Kong travelers. The airline plans to increase frequency on existing routes this year. For more commercial aviation news, visit flying.flights.