SINGAPORE (Reuters) - Hong Kong’s Cathay Pacific Airways Ltd (0293.HK) on Monday said it would sell eight freighters to DHL International for HK$2.199 billion ($281.89 million) and lease them back as part of a deal to gain full control of cargo airline Air Hong Kong.
Cathay owns 60 percent of Air Hong Kong, with Deutsche Post AG (DPWGn.DE) unit DHL International holding the remainder. However, the Hong Kong airline said in a statement its stake is expected to rise to 100 percent after a joint venture agreement expires at the end of 2018.
The pair had agreed to a non-binding memorandum of understanding in July before finalizing the deal and announcing the aircraft sales price on Monday.
Cathay said proceeds from the freighter sale would be applied to the general working capital requirements of Air Hong Kong, and the cargo carrier would operate an agreed freighter network to Asian destinations for DHL.
Completion of the sale of five A300-600F freighters is expected by Dec. 31, with three more to be sold by the end of next year.
The sale has been finalised at a time of improved cargo market conditions. Cathay in August reported a 12 percent rise in first-half cargo revenue and said the outlook for the rest of the year was strong - an important bright spot for the firm after it logged its worst half-loss in at least 20 years.
DHL was not immediately available for comment.
($1 = 7.8008 Hong Kong dollars)
Reporting by Jamie Freed; Editing by Sherry Jacob-Phillips