China Airlines invests in China Aircraft Services Limited

Beginning in January 2006, China Airlines is to switch its aircraft maintenance work at Hong Kong International Airport from HAECO to China Aircraft Services Limited (CASL).

CASL is one of the three largest ground handling and aircraft maintenance providers at Hong Kong International Airport, and offers a comprehensive range of aircraft maintenance and support services which cover maintenance operations, cabin services, ground support equipment, supply and stores. The company has solid profitability and a good financial background, with an annual revenue of HK$ 250 million in 2004. Its 24 major clients include Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines, United Airlines, Japan Airlines, British Airways, Air France, Lufthansa, and Dragon Airlines. CASL is entrusted to maintain 21 aircraft types and 13 engine types, and also provides ground services.

The China Airlines investment will buy a 13.33% stake from China National Aviation Corporation (CNAC) and a 6.67% stake from Hutchison Whampoa. Following the investment, CNAC will hold a 40% share in CASL, and China Airlines, Hutchison Whampoa and United Airlines will each hold 20%. With the new investment, China Airlines will not only be charged less for aircraft maintenance and ground service at Hong Kong Airport, but also stands to benefit as CASL moves further into the fast-growing Mainland China market.

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