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Air China, the country's flag carrier, will increase its stake in Cathay Pacific Airways to nearly 30 percent by buying shares from CITIC Pacific at HK$6.335 billion.

The Beijing-based airline will buy 491.9 million shares of Cathay at HK$12.88 apiece from CITIC Pacific, according to a statement posted on the Hong Kong Stock Exchange.

The deal will make Air China the Hong Kong carrier's second largest shareholder after British conglomerate Swire Pacific.

The British company will also buy 78.7 million Cathay shares from CITIC Pacific at the same price and will hold 41.97 percent of Cathay. CITIC Pacific's shares in Cathay will fall from 17.5 percent to just 2 percent.

The three companies will resume trading in Hong Kong today after being suspended yesterday pending the announcements.

Analysts said the share sale would be an important step for CITIC Pacific to sell off non-core assets that had low returns and restructure its diversified businesses. The investment company was forced to seek a government bailout after HK$15 billion in currency losses last year. The company said in May that it would focus on special steel, mineral resources and real estate sectors in future.

"The global economic crisis has dealt a heavy blow to Cathay as premium travel demand plunged. The situation will still be tough next year," said Li Lei, an aviation analyst with CITIC China Securities.

Feng Lei, an analyst from Cinda Securities, said the deal would boost Air China's presence in Hong Kong as it faces rising challenges from China Eastern Airlines' planned acquisition of Shanghai Airlines.

#1 Which firm is releasing most of its holdings in Cathay Pacific? CITIC Pacific #2 What percentage stake will Air China now hold in the HK based airline? Nearly 30% #3 What was the reason given for the sale by CITIC Pacific? The global economic crisis which affected premium travel demand

（英语点津 Helen 编辑）

Brendan joined The China Daily in 2007 as a language polisher in the Language Tips Department, where he writes a regular column for Chinese English Language learners, reads audio news for listeners and anchors the weekly video news in addition to assisting with on location stories. Elsewhere he writes Op'Ed pieces with a China focus that feature in the Daily's Website opinion section.

He received his B.A. and Post Grad Dip from Curtin University in 1997 and his Masters in Community Development and Management from Charles Darwin University in 2003. He has taught in Japan, England, Australia and most recently China. His articles have featured in the Bangkok Post, The Taipei Times, The Asia News Network and in-flight magazines.