Qatar Airways buys 9.6% stake in Hong Kong’s Cathay Pacific
QATAR Airways’ surprise purchase of a 9.6 percent stake in Cathay Pacific Airways to gain a foothold in East Asia has dampened a long-held speculation among investors that the Hong Kong flag carrier would soon merge with another major shareholder: Air China.
Qatar Air on Sunday agreed to buy the stake for HK$5.16 billion (R9.4bn) from Hong Kongbased Kingboard Chemical Holdings and related companies, which have been steadily amassing shares in the airline for the past year.
The purchase, the first by a Middle Eastern airline in an East Asian carrier, makes the Doha-based company the third-largest shareholder in Cathay after Hong Kong conglomerate Swire Pacific with 45 percent, and state-owned Air China with almost 30 percent. Cathay’s stock fell the most in more than three months.
“Cathay will have three major shareholders, all with different and potentially conflicting interests,” said Corrine Png, chief executive of Crucial Perspective, which focuses on research in Asia transportation equities. “We still think it makes more economic sense for Cathay and Air China to merge longer term, but given this new development with Qatar Airways in the picture, it is going to become more complicated for all three parties.”
Behind the investment is the battle for better access to China, which is expected to become the world’s biggest aviation market within a decade.
US carrier Delta Air bought a minority stake in China Eastern Airlines in 2015, while American Airlines purchased a minority stake in China Southern Airlines this year.
“Cathay Pacific is one of the strongest airlines in the world, respected throughout the industry and with massive potential future,” Qatar Airways chief executive Akbar Al Baker said. Cathay chief executive Rupert Hogg said yesterday that he looks forward to a “continued constructive relationship” with Qatar Air, a fellow member of the Oneworld Alliance of airlines.
Zhou Feng, board secretary at Air China, said having an airline as Cathay’s stakeholder, rather than Kingboard Chemical, would “bring about better synergy” as an airline stakeholder has a better understanding of Cathay’s strategy and business.