The shareholders of Air China, Cathay Pacific Airways, China National Aviation Company and CITIC Pacific have approved a shareholding realignment.

With this restructuring, Air China will acquire a strategic stake in Cathay Pacific. Cathay Pacific will also increase its strategic investment in Air China, while Dragonair will become a wholly owned subsidiary of Cathay Pacific. Air China and Cathay Pacific will enter into an Operating Agreement that will include implementing reciprocal sales representation where Air China will be exclusively responsible for Cathay Pacific's passenger sales in Mainland China and Cathay Pacific will be exclusively responsible for Air China's passenger sales in Hong Kong, Macau and Taiwan.

The votes were cast at Extraordinary General Meetings of the four companies involved. The Cathay Pacific, CITIC Pacific and CNAC meetings were held in Hong Kong, and the Air China Extraordinary General Meeting was held in Beijing.

The shareholders' approvals mark an important step towards completing the deal. Upon satisfaction of certain other conditions, including the necessary regulatory approvals, the new arrangements will come into effect on a date to be announced.

The shareholding realignment will create one of the world's strongest airline groupings. The restructuring will also deliver significant benefits for the Chinese aviation industry and its customers, and strengthen the position of Hong Kong and Beijing as key aviation hubs in the region.

Swire Pacific will remain the principal shareholder in the enlarged Cathay Pacific group. Dragonair will continue to operate under its own brand, but under Cathay Pacific management.