Qatar Airways acquires 9.61pc of Cathay Pacific

The Middle Eastern carrier will buy 9.6 per cent of Cathay from Hong Kong-based Kingboard Chemical Holdings Ltd and its associates for HK$5.16 billion (S$902.31 million), according to a filing to the city's stock exchange Monday.

Separately, Qatar Airways chief executive Akbar Al Baker said: "Qatar Airways is very pleased to complete its financial investment in Cathay Pacific".

Cathay Pacific is a fellow oneworld member.

"I don't see Cathay being excited about this and I wouldn't expect major changes even in the medium term", said Will Horton, an analyst at CAPA Centre for Aviation in Hong Kong. It holds 20 per cent in International Airlines Group (the parent company of Aer Lingus, British Airways, Iberia and Vueling), 10 per cent of LATAM Airlines Group and 49 per cent in Italian carrier Meridiana. Cathay shares have risen by 29.4 percent since the start of January despite the airline in August posting its worst first-half loss in 20 years.

Kingboard Chemical said the group, which will cease to hold any Cathay Pacific shares following the transaction, will recognize a gain of about HK$800 million from the sale in its annual results.

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

Earlier in 2017, Qatar had planned to buy into American Airlines, but the idea was dropped after the United States carrier expressed little enthusiasm for the deal.

The deal is expected to close on Monday 6 November.

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 global airline faces mounting competition from low-priced and mainland Chinese rivals. Officials at Qatar Airways and Cathay Pacific couldn't immediately be reached for comment outside regular business hours.

"Geographically, the Middle Eastern carriers have been constrained from conquering Hong Kong and China", said Mohshin Aziz, an analyst at Maybank Investment Bank Kuala Lumpur.

Cathay is now working through a transformation, or cost-cutting drive as part of efforts to turn around a first half loss for calendar 2017.

In particular, the rapid growth of Chinese carriers on global routes has reduced the number of passengers from China transiting through Cathay's Hong Kong hub.

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