Korean Air Lines Co, the world's second-largest airfreight carrier, said it's agreed to invest in China's first private airline, Okay Airways Co (
The agreement, signed earlier this month, is non-binding and the size, value and timing of the investment have yet to be agreed on, Seoul-based Korean Air said in a press statement.
Gang Liang, a press relations officer at Beijing-based Okay Airways, declined to comment.
Korean Air is focusing its resources in China as it aims to become the world's biggest air cargo carrier by 2007. Korean Air is carrying more cellphones, flat-screen monitors and other products from China and other Asian countries to the US and Europe. Revenue from airfreight operations accounted for 35 percent of the airline's total sales in the first quarter of this year.
A venture between Korean Air and closely held Okay Airways may be the fourth such tie-up in China involving overseas airlines, after China Airlines (華航), Lufthansa AG's cargo unit and Singapore Airlines Cargo Pte invested in Chinese companies.
Korean Air plans to buy up to 49 percent of Okay Airways, the Maeil Business Newspaper reported yesterday, citing an unidentified person related to the South Korean airline.
Overseas companies may own up to 49 percent of a Chinese airline, while no single foreign company can own more than 25 percent, under the nation's laws.
Korean Air's shares fell 0.3 percent to 18,800 won (US$18.38) at 11:16am in Seoul.
China Airlines, Taiwan's largest carrier, won approval in 2003 to invest 375 million yuan (US$45 million) from the Chinese government to buy a quarter of China Eastern Airlines Corp's (東方航空) cargo unit, in the first freight airline tie-up of its kind in the country.
Lufthansa AG's cargo unit, the world's third-biggest airfreight carrier, set up a venture with Shenzhen Airlines Co (深圳航空) last October. Jade Cargo International, as the venture is called, is 51 percent owned by Shenzhen Airlines and 25 percent owned by Lufthansa.
Singapore Airlines Cargo, the world's third-largest airfreight carrier, said in May it will form a cargo carrier in China with Temasek Holdings Pte and China Great Wall Industry Corp (中國長城工業). Singapore Airlines Cargo will own 25 percent of the new airline. State-owned China Great Wall Industry will hold 51 percent and Dahlia Investments Pte, a unit of Singapore's state-owned investment arm Temasek, will hold 24 percent.