{"id":3935,"date":"2019-03-05T18:34:54","date_gmt":"2019-03-06T00:34:54","guid":{"rendered":"http:\/\/planesintheair.com\/?p=3935"},"modified":"2019-03-05T18:35:00","modified_gmt":"2019-03-06T00:35:00","slug":"cathay-pacific-in-talks-to-buy-stake-in-hk-express-airways","status":"publish","type":"post","link":"https:\/\/planesintheair.com\/?p=3935","title":{"rendered":"Cathay Pacific in Talks to Buy Stake in HK Express Airways"},"content":{"rendered":"\n

HONG KONG\/SINGAPORE (Reuters) – Hong Kong flagship carrier Cathay Pacific Airways Ltd said on Tuesday it is in “active discussions” about an acquisition involving budget airline Hong Kong Express Airways Ltd, although an agreement has yet to be reached.<\/p>\n\n\n\n

Such\n a deal would give Cathay exposure to the growing budget-travel market \nat a time when a lack of slots at Hong Kong International Airport has \nconstrained its ability to follow peers like Singapore Airlines Ltd and \nQantas Airways Ltd and set up its own budget brand.<\/p>\n\n\n\n

The\n Hong Kong carrier has instead shifted some destinations from its main \nbrand to its regional carrier, Cathay Dragon, as part of a \ntransformation plan designed to cut costs and increase revenue. It has \nordered 32 Airbus SE A321neos for Cathay Dragon.<\/p>\n\n\n\n

Cathay\n said it had decided to go public about the discussions in response to \nmedia reports suggesting it may be in talks to acquire shares in Hong \nKong Express Airways Ltd and full-service sister carrier Hong Kong \nAirlines Ltd from cash-strapped Chinese conglomerate HNA Group Co Ltd.<\/p>\n\n\n\n

It\n did not detail the potential value of the transaction, nor the size of \nthe stake it would hold. It said it would issue an additional statement \nwhen appropriate.<\/p>\n\n\n\n

An analyst last year estimated to Reuters that HK Express could be worth about $300 million.<\/p>\n\n\n\n

HNA and HK Express did not immediately respond to a request for comment.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

A\n person with knowledge of the matter said the companies appeared close \nto reaching an agreement and noted Cathay’s parent Swire Pacific Ltd had\n historically taken majority stakes when making investments.<\/p>\n\n\n\n

Cathay is not interested in Hong Kong Airlines because it has both similar routes and full-service positioning, the person said.<\/p>\n\n\n\n

A\n second person with knowledge of the matter said Cathay had signed an \nexclusivity period for discussion but other parties remained interested \nin HK Express if a deal could not be reached.<\/p>\n\n\n\n

Both sources spoke on the condition of anonymity as discussions are confidential.<\/p>\n\n\n\n

ANTITRUST<\/p>\n\n\n\n

Given Cathay’s dominance of Hong Kong’s aviation market, a deal could attract scrutiny from the competition regulator.<\/p>\n\n\n\n

Some\n analysts have also expressed doubts about the likely benefits of any \ndeal. Daiwa analyst Kelvin Lau said he did not see much value from the \nacquisition as the two airlines flew similar routes, but also because \nCathay would need to undertake significant reform to add a budget wing.<\/p>\n\n\n\n

Jefferies analyst Andrew Lee however said in a note to clients it would be “positive for Cathay Pacific” as it would give the airline greater access to a different passenger segment in the low-cost market.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

FLYING HIGH<\/p>\n\n\n\n

News\n of Cathay’s interest in HK Express comes just weeks after Hong Kong’s \nflagship carrier projected its annual profit at more than double analyst\n estimates, sending its shares surging nearly 9 percent.<\/p>\n\n\n\n

Shares\n of Cathay have risen more than 19 percent so far this year, compared \nwith an 8 percent fall in 2018. The airline’s shares jumped more than 3 \npercent on Tuesday morning.<\/p>\n\n\n\n

Cathay has faced repeated questions from investors over the last few years about its failure to set up a budget carrier.<\/p>\n\n\n\n

Chief\n Executive Rupert Hogg has said it would be difficult to do so until a \nthird runway was completed at Hong Kong International Airport in 2024, \nopening up more slots.<\/p>\n\n\n\n

“Our\n home-based airport is full at the moment, or largely full, and so it’s \nnot a perfect place to develop a model from scratch,” he told CAPA \nCentre for Aviation last May.<\/p>\n\n\n\n

HK\n Express operates a fleet of 25 A320 family aircraft to regional \ndestinations around Asia, according to plane tracking website \nFlightRadar24.<\/p>\n\n\n\n

Embattled\n HNA Group is more than a year into the process of unwinding a $50 \nbillion acquisition spree that at its peak netted the company stakes in \nbanks, fund managers, hotels, property and airlines, among other assets.<\/p>\n\n\n\n

(Reporting by Donny Kwok in Hong Kong and Jamie Freed in Singapore; Additional reporting by Kane Wu in Hong Kong; Editing by Anne Marie Roantree and Stephen Coates)<\/p>\n\n\n\n

\"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

Hong Kong flagship carrier Cathay Pacific Airways Ltd said on Tuesday it is in “active discussions” about an acquisition involving budget airline Hong Kong Express Airways Ltd, although an agreement has yet to be reached.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[798,797,89,2203,1397,868,1103],"tags":[238,3648,47,420,92,625,1190,1925,1015,3650,3647,3646,575,3649,745,744,3652,2858,199,2859,2470,276,412,1016,485,1288,3629,3653,1286,413,3651,3654],"class_list":["post-3935","post","type-post","status-publish","format-standard","hentry","category-airbus-news","category-airline-news","category-aviation-news","category-finance-news","category-stock-news","category-transportation-news","category-travel-news","tag-a321","tag-acquisition","tag-airbus","tag-airline","tag-airport","tag-airways","tag-budget","tag-carrier","tag-cathay","tag-constraint","tag-discussion","tag-dragon","tag-express","tag-flagship","tag-group","tag-hna","tag-hogg","tag-hong","tag-international","tag-kong","tag-ltd","tag-neo","tag-news","tag-pacific","tag-qantas","tag-reuters","tag-runway","tag-rupert","tag-se","tag-singapore","tag-swire","tag-third"],"_links":{"self":[{"href":"https:\/\/planesintheair.com\/index.php?rest_route=\/wp\/v2\/posts\/3935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/planesintheair.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/planesintheair.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/planesintheair.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/planesintheair.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3935"}],"version-history":[{"count":2,"href":"https:\/\/planesintheair.com\/index.php?rest_route=\/wp\/v2\/posts\/3935\/revisions"}],"predecessor-version":[{"id":3940,"href":"https:\/\/planesintheair.com\/index.php?rest_route=\/wp\/v2\/posts\/3935\/revisions\/3940"}],"wp:attachment":[{"href":"https:\/\/planesintheair.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/planesintheair.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/planesintheair.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}