Qatar Airways buys 9.61 per cent stake in Cathay Pacific

Share

Qatar Airways said on November 6 it had agreed to buy 9.6 percent of Hong Kong rival Cathay Pacific Airways.

As a result of the deal, Qatar Airways has become Cathay Pacific's third largest shareholder.

Qatar Airways will purchase the stake for HK$5.16 billion (€570 million) from Kingboard Chemical Holdings and associates, according to a statement, becoming Cathay's third-largest investor after local conglomerate Swire Pacific, with a 45 per cent holding, and Air China Ltd. with nearly 30 per cent.

Qatar adds that the investment "further supports" the airline's investment strategy.

Qatar Airways announced that it has entered into an agreement to purchase an amount of 378,188,000 shares of Cathay Pacific Airways, being approximately 9.61 percent of the total issued share capital.

More news: Emenalo resigns from Chelsea
More news: Pochettino 'confident' Kane will face Madrid
More news: Fox Renewed O'Reilly Contract Despite $32 Million Harassment Settlement

The stake by Qatar in Cathay will give the airline a third shareholder that is strategic behind Air China Ltd and Swire Pacific, possibly complicating its plan for restructuring, whose goal is to slash costs of HK$4 billion during the next three years.

Without domestic flights to underpin earnings, Asian carriers Cathay and Singapore Airlines have struggled against Chinese and Middle Eastern rivals, with Cathay already shedding 600 jobs since May.

Shares of Cathay have increased by over 29% since the beginning of 2017 despite the air carrier posting in August its worst loss for the first six months of a year in the last 20 years.

Since June, Qatar has been isolated by neighbouring countries including Saudi Arabia and the United Arab Emirates.

Mr Will Horton, a Hong Kong-based senior analyst at CAPA Centre for Aviation, said that while Qatar Airways' investment in Cathay was likely to be passive, difficulties could arise if the two carriers tried to better integrate their hubs.

Share