Qatar Airways gets seat for any Cathay dealmaking

Nov 07, 2017, 00:23
Qatar Airways gets seat for any Cathay dealmaking

Cathay Pacific Airways dropped in Hong Kong after Qatar Airways agreed to buy a stake to become the Hong Kong-based carrier's third biggest shareholder.

Earlier this year it made a bid to buy 10 percent in American Airlines, the United States' largest carrier, but the deal went sour and Qatari officials eventually said that "it no longer met" Qatar Airways' goal.

The Middle Eastern carrier said it bought nearly 3.8 million Cathay shares, which represents a 9.6 per cent stake in Hong Kong's biggest airline.

The state-owned Gulf carrier said it had acquired a 9.6 percent stake in Cathay, which would make it the third-largest shareholder in the Hong Kong airline. According to Reuters, Qatar Airways bought roughly 378 million of Cathay Pacific's shares from Hong Kong's Kingboard Chemical Holdings for about US$661 million. Air China Limited and Swire Pacific Limited together continue to hold 74.99 percent shares of the airline.

Without having domestic flights as a way to underpin its earnings, carriers in Asia such as Singapore Airlines and Cathay has struggled against Middle East and Chinese rivals, as Cathay already has shed over 600 jobs over the last six months.

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

Since June, Qatar has been isolated by neighbouring countries including Saudi Arabia and the United Arab Emirates.

Despite Cathay's woes, Qatar Airways chief executive Akbar al-Baker described it as "one of the strongest airlines in the world. with massive potential for the future". Qatar owns slightly more than 20% of IAG, the parent of British Airways, Iberia, Aer Lingus, Vueling and Level; 10% of South America's LATAM Airlines Group; and 49% of Italian carrier Meridiana.