Hong Kong Airport Authority plans to buy a stake in an airport in one of China's richest provinces, its first investment outside the city, as the government-owned operator seeks closer ties with the mainland.
The airport authority yesterday signed a letter of intent to form an alliance with Hangzhou Xiaoshan International Airport Co, which operates an airport in the eastern city of Hangzhou, capital of Zhejiang Province, David Pang, chief executive of Hong Kong's airport operator, told reporters.
Zhong Shan, Zhejiang's vice governor, said on Friday the airport authority will buy more than 30 percent of the Hangzhou Xiaoshan airport.
Zhong's comments on the size of the stake "provides guidance to our talks," Pang said, declining to give the size of the proposed acquisition. "We hope that in a few months we can reach a deal."
Hong Kong's Chek Lap Kok airport, Asia's third-busiest by passenger numbers, faces increasing competition for air traffic from airports in southern China. Baiyun airport in Guangdong Province opened last year and is the base for China Southern Airlines Co, the nation's largest carrier by fleet size.
Pang said in October that Hong Kong wants to invest in regional airports and is in talks with Macau, and the southern Chinese cities of Zhuhai, Guangzhou and Shenzhen, to strengthen cooperation and possibly buy stakes in their airports.
Hong Kong's government plans to sell shares in the Airport Authority by 2006, Pang said in October. The government said in November it may raise charges at the airport to boost its profitability after an initial public offering of the Airport Authority.
Hangzhou Xiaoshan airport handled 6.4 million passengers last year, 45 percent more than in 2003. Hangzhou, a commercial center famous for a nearby lake that is one of China's most popular tourist attractions, had a population of 6.4 million people in 2003, according to a city government Website that cited its most recent figures.
Hangzhou Xiaoshan airport had a profit of 67 million yuan (US$8.1 million) last year and currently has total assets of 2.2 billion yuan, said Chen Haimei, chairman of the company, at the press conference in Hong Kong.