Hong Kong flag carrier Cathay Pacific announced on Wednesday it will buy budget airline HK Express for 628.15 million USD. File photo/ AFP
HONG KONG: Hong Kong flag carrier Cathay Pacific announced on Wednesday that it will buy budget airline HK Express for US$628.15 million, as it moves to counter competition from the increasing number of low-cost carriers in the region.
The HK$4.93 billion acquisition leaves Cathay Pacific in control of three of the four airlines in Hong Kong, adding to its namesake carrier and regional subsidiary Cathay Dragon.
Cathay will pay HK$2.25 billion in cash for HK Express, and issued HK$2.68 billion promissory loan notes, the company said in a filing.
The deal is expected to complete by December 2019, according to the filing. The carrier said it will continue to operate HK Express as a “standalone airline using the low-cost carrier business model.”
“The Transaction is expected to generate synergies as the businesses and business models of Cathay Pacific and HKE are largely complementary,” Cathay said in the filing.
The carrier also said the purchase is an “attractive and practical way” to support long-term development and enhance competitiveness.
Cathay shares rose 2.78 per cent to HK$14.06 in Hong Kong trading shortly after the market opened.
Hong Kong Express is the city's sole budget carrier — a sector of the industry that a marquee brand like Cathay has struggled to compete against.
Hong Kong Express is owned by HNA Group, a struggling Chinese conglomerate that has been looking to lower its debt pile. The group also owns Hong Kong Airlines, another Cathay competitor that has found itself in financial difficulties in recent months.
Cathay has been overhauling its business after posting its first losses for eight years in 2016, firing more than 600 workers and paring overseas offices and crew stations as it faces stiff competition from budget rivals in China.
It has also added international routes and better on-board services in a bid to compete with well-heeled Middle Eastern long-distance carriers.
The overhaul appears to have paid off. Earlier this month Cathay Pacific announced a net profit of HK$2.35 billion ($299 million) last year, ending two successive annual losses.
With anti-government protesters in Hong Kong seizing the parliament’s main debating chamber and daubing its walls with graffiti, the political situation in the territory has turned from bad to worse. The Hong Kong government has already declared that the storming of parliament amounts to “extreme violence.”
Those Americans who fear for the future of American democracy should be inspired by the massive pro-democracy demonstrations occurring this week in Hong Kong.
It has become clear that Hong Kong Chief Executive Carrie Lam greatly misjudged the public mood. Though she has taken the rare step of apologising, it does not seem to have convinced the hundreds of thousands of black-clad protesters who have maintained calls for her to resign over her handling of a bill
Ethan Chu was volunteering at an aid station near government headquarters here last week for what started out as a peaceful demonstration. Then, without warning, the 18-year-old high school student heard the pop and hiss of tear gas canisters and the shrieks of fellow protesters being pelted by rubber bullets.
India’s current account (CA) balance deficit grew to $68 billion in 2018-19 from $49 billion the previous year, according to the International Monetary Fund (IMF), which said the deficit was justified by development needs.
After successful hospitality venture UAE’s leading business giant Danube Group, enters into the healthcare division with the launch of American Aesthetic Medical Center on Wednesday in Dubai.
Global shares slipped on Thursday on growing signs that a trade dispute between the United States and China was taking a toll on corporate earnings, with nerves spreading from Wall Street through Asia to European markets.
Canadian University Dubai (CUD) has recently joined forces with two more leading names in the hospitality industry to help boost the skills supply to the UAE tourism sector as Dubai prepares to attract 25 million visitors by 2025.