Qatar Airways to buy 9.6% of Cathay Pacific for $662 million
Qatar Airways will buy 9.6% of Cathay from Hong Kong-based Kingboard Chemical Holdings and its associates for $662 million
Singapore: Qatar Airways Ltd agreed to acquire a stake in Cathay Pacific Airways Ltd, a deal that would make it the third-largest shareholder in the premium carrier as Asia’s biggest international airline faces mounting competition from low-cost and mainland Chinese rivals.
The Middle Eastern carrier will buy 9.6% of Cathay from Hong Kong-based Kingboard Chemical Holdings Ltd and its associates for HK$5.16 billion ($662 million), according to a filing to the city’s stock exchange Monday. Officials at Qatar Airways and Cathay Pacific couldn’t immediately be reached for comment outside regular business hours.
The purchase, the first by the Middle Eastern airline in an Asian carrier, may help the Doha-based company gain a toehold in the region and get access to mainland China that is set to emerge as the world’s biggest aviation market within a decade. The deal comes a few months after Qatar Airways dropped a plan to invest in American Airlines Group Inc., which rebuffed the attempt.
The Middle Eastern airline has a 20% stake in British Airways parent IAG SA. It also has 10% of Latam Airlines Group SA, the biggest South American carrier, and plans to take a 49% stake in minor Italian operator Meridiana SpA.
After Qatar Airways approached American Air for a stake, the US company’s chief, Doug Parker said he wasn’t keen on having the Gulf carrier as a shareholder. While the airlines are partners in the Oneworld alliance, Qatar Airways’ move came as a surprise since American had publicly opposed the growth of Middle Eastern airlines in the US, saying they’ve benefited from $50 billion in illegal aid.
Cathay Pacific is also part of the Oneworld alliance. Hong Kong conglomerate Swire Pacific Ltd, is the largest shareholder of Cathay with 45%, followed by state-owned Air China Ltd with about 29.99%.
Cathay is in the midst of the biggest corporate revamp in two decades to help revive earnings. It has announced job cuts and was in talks with pilots over compensation as it reported its worst half-year loss in at least two decades in the six months through June.
Kingboard Chemical, a diversified group that is into the manufacture of laminates, glass yarn and copper foil, had built up the stake in Cathay Pacific through purchases from the stock market along with its associates. Bloomberg