Qatar Airways Buys 9.61% Stake In Cathay Pacific

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Qatar Airways continues its airline shopping spree this time acquiring 9.61% stake in Cathay Pacific. The airline already owns 20% of IAG (parent of British Airways, Iberia, Aer Lingus, Vueling and Level), 10% of LATAM and 49% stake in Meridiana.

Cathay Pacific

Cathay Pacific hasn’t done too well lately due to badly timed fuel hedges at wrong prices that they had to write down. Air China owns 29.99% stake in the airline and there has been speculations that they might would like to increase their stake and perhaps even merge.

Here’s an excerpt from South China Morning Post (access the piece here):

Hong Kong conglomerate Swire Pacific remains the largest shareholder in Cathay with a 45 per cent stake and Air China controls 29.99 per cent, while the remaining shares not owned by Qatar Airways are publicly traded.

Hong Kong’s flagship airline has had a difficult few years, facing mounting competition from Middle East, mainland Chinese and low-cost carriers which now offer flights to the same destinations served by Cathay Pacific. The carriers usually include a stop at their home airports, making their fares cheaper than Cathay Pacific’s direct flights.

Here’s the announcement from Qatar Airways:

Qatar Airways Q.C.S.C. (“Qatar Airways”) is pleased to announce that it has entered into an agreement to purchase an amount of 378,188,000 shares of Cathay Pacific Airways Limited (“Cathay Pacific”), being approximately 9.61 per cent of the total issued share capital. Completion of the transaction is expected to take place later today in Hong Kong.

Qatar Airways Group Chief Executive, His Excellency Mr Akbar Al Baker said, “Qatar Airways is very pleased to complete its financial investment in Cathay Pacific.” “Cathay Pacific is a fellow oneworld member and is one of the strongest airlines in the world, respected throughout the industry and with massive potential for the future.”

This investment further supports Qatar Airways investment strategy which already includes 20% investment in International Airlines Group, 10% investment in LATAM Airlines Group and 49% investment in Meridiana.”

And here’s statement from Cathay Pacific:

Qatar Airways Q.C.S.C. (‘Qatar Airways’) has announced today that it has acquired approximately 9.61 per cent stake in Cathay Pacific Airways Limited (‘Cathay Pacific’). Both Cathay Pacific and Qatar Airways collaborate together as members of the oneworld alliance.

Air China Limited and Swire Pacific Limited together continue to hold 74.99 per cent shares of the airline.

Commenting on the share acquisition, Cathay Pacific Chief Executive Officer, Rupert Hogg said, “Qatar Airways is one of the world’s premier airlines. We already work together closely as fellow members of the oneworld alliance and we look forward to a continued constructive relationship.”

Conclusion

Qatar Airways continues to buy stakes in number of airlines. IAG, LATAM and Cathay Pacific are all part of Oneworld. Their attempt to invest into American Airlines didn’t work out due to badly timed comments by the Al Baker about the look of American flight attendants.

Cathay Pacific used to shuttle traffic between mainland China and Taiwan and other cities as well. Now, airlines can fly many of these routes directly bypassing the unneeded Hong Kong transit.

Seems that the Cathay Pacific CEO is not too fond of the Qatar Airways stake based on the wording used on the statement. Comes bit cold.

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