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New Airport Ground Handling JV in Shanghai

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Shanghai Airport Authority, Shanghai International Airport, Air China and Cathay Pacific have established a joint venture company in Shanghai for the provision of airport ground handling services at Shanghai Pudong International Airport and Shanghai Hongqiao International Airport.

The joint venture company Shanghai International Airport Services Co., Limited will be 41% owned by Shanghai International Airport Co., Ltd and 10% by Shanghai Airport Authority which is the majority shareholder of Shanghai International Airport Co., Ltd. Air China and Cathay Pacifics wholly owned subsidiary Hong Kong Airport Services Limited (HAS) will hold 24% and 25% of the joint venture company respectively.

Air China and HAS will contribute RMB86.4 million and RMB90 million in cash to the registered capital of the joint venture company for their respective 24% and 25% shareholding. Cathay Pacific and HAS will provide strategic management support to the joint venture company.

Shanghai Airport Authority and Shanghai International Airport Co., Ltd. will inject cash and their existing ground service equipment into the joint venture company as their contributions in kind in respect of their respective 10% and 41% shareholding in the joint venture company.

Shanghai Airport Authority and Shanghai International Airport Co., Ltd will switch their existing airport ground handling services contracts, including those in respect of Cathay Pacific and its sister airline Dragonair, to the joint venture company. Air China will also transfer its relevant ground handling services business to the joint venture company at an appropriate time.

The existing ground handling services staff of Shanghai Airport Authority and Shanghai International Airport Co., Ltd. will be transferred to the new joint venture company to ensure the continuity of operations at both Pudong and Hongqiao airports.

Subject to approval by the relevant Chinese government authorities, the joint venture company is expected to commence operations in the third quarter of 2012.

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