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HONG KONG: Cathay Pacific and Air China have agreed to increase the share capital of their Air China Cargo (ACC) subsidiary by ¥2 billion to ¥5.235 billion.

According to a June 25 filing with the Hong Kong Stock Exchange, the capital injection is to help ACC "adjust its fleet, reduce operating costs and improve the performance of its main cargo business". The money will also be used to develop the airline's charter flying on behalf of China Postal Airlines.Air China Cargo

The three shareholders: Cathay Pacific China Cargo, Air China and Fine Star, an investment company owned by Advent Fortune and registered in the British Virgin Islands, own 25 percent, 51 percent and 24 percent respectively of ACC.

Advent Fortune Limited received a loan from Cathay Pacific in 2010 to finance its acquisition of Fine Star and the subsequent share of Air China Cargo that, according to the filing, is now pledged to Cathay Pacific.

Separately, the shareholders say they have loaned ACC ¥2 billion. At the end of 2013, ACC had net assets of ¥639 million. The company made a net loss of ¥349 million last year.

In the past five years, the U.S. Export-Import bank (Ex-Im), which is guaranteed by the U.S. Treasury, has provided Cathay Pacific with US$3.26 billion and Air China US$2.13 billion in aircraft financing. According to evidence presented to the U.S. House of Representatives in the same week as the new Air China Cargo capital injection, since 2001 Ex-Im has provided US$80 billion to finance the purchase of Boeing widebody aircraft by foreign airlines.

In addition to B747 and B757 cargo aircraft, ACC now has three B777-200 freighters with another five due for delivery in the next two years. Current international services include Tokyo, Osaka, Frankfurt, Amsterdam, Zaragoza, New York, Chicago, Los Angeles and Dallas.

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