Grand China Air, part-owned by U.S. financier George Soros and the Chinese province of Hainan, won approval to buy a stake in Hong Kong Airlines, paving the way for expansion outside of the mainland.
China's central government has endorsed a deal, according to a statement posted on the National Development and Reform Commission's Web site today. It provided no further details.
New investment may help Hong Kong Airlines compete with larger rival Cathay Pacific Airways Ltd. (293) as the global credit crisis slows air-travel demand across Asia. A deal could also support Hainan's drive to transfer all of its airline investments into Grand China Air, already the biggest shareholder in Hainan Airlines Co., China's fourth-largest carrier.
Hong Kong Airlines and affiliate Hong Kong Express are currently controlled by Hainan through HNA Group, which also operates airports on the southern Chinese island.
HNA Group spokesman Sun Qijie declined to comment today. Hong Kong Airlines Chairman Ren Weidong was unavailable.
Grand China is 49 percent owned by the government of Hainan province. U.S. billionaire Soros owns 19 percent.
Hong Kong Airlines and Hong Kong Express currently fly to 24 destinations across China and other Asian nations, according to their Web site.
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