Cathay Pacific takes over Hong Kong Express

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Cathay Pacific takes over Hong Kong Express

By
27 March 2019

By | 27 March 2019

The Hong Kong carrier will acquire its low-cost competition for $628 million

The Hong Kong-based major airline — Cathay Pacific — is about to add a new low-cost service under its operation. The carrier has announced an acquisition of its competing carrier — Hong Kong Express.

Cathay Pacific will turn Hong Kong Express into its wholly-owned subsidiary — Tommy Alven / Shutterstock Cathay Pacific takes over Hong Kong Express Group Created with Sketch. Cathay Pacific will turn Hong Kong Express into its wholly-owned subsidiary — Tommy Alven / Shutterstock

The budget carrier HK Express has been covering various profitable regional routes and will become Cathay’s wholly-owned subsidiary.   

The transaction will cost $628m (HK$4.93bn) and should be finalised by the end of this year. The purchase will be made in cash and through promissory loan notes, the company said in a stock filing.

“We intend to continue to operate Hong Kong Express as a stand-alone airline using the low-cost carrier business model,” a Cathay Pacific spokesperson said in a statement.

The HK Express captures “a unique market segment,” the spokesperson said, adding that the deal “represents an attractive and practical way for the Cathay Group to support the long-term development and growth of our aviation business.”

Cathay has been facing strong competition from low-cost Chinese carriers

The move comes while Cathay Pacific has been overhauling its business to cut costs. After two years of losses, the airline returned to profit in 2018.

Hong Kong Express currently belongs to HNA Group and operates regional budget-friendly routes  — EQRoy / Shutterstock Cathay Pacific takes over Hong Kong Express Group Created with Sketch. Hong Kong Express currently belongs to HNA Group and operates regional budget-friendly routes — EQRoy / Shutterstock

Cathay has been facing strong competition from low-cost Chinese carriers covering Hong Kong, mainland China and Southeast Asia. Even the HK Express competes with Cathay on certain routes.

“The transaction represents an attractive and practical way for the Cathay Pacific Group to support the long-term development and growth of its aviation business and to enhance its competitiveness,” Cathay said in an official statement.

Cathay Pacific has been negotiating to acquire the HK Express for some time. The low-cost carrier belongs to the HNA Group which also owns Hong Kong Airlines. However, the group has been going through a troubled financial phase.