南華早報
https://www.scmp.com/news/hong-kong/transport/article/3003219/cathay-pacific-
agrees-deal-take-over-budget-airline-hk
https://goo.gl/dYhEvz
Cathay Pacific agrees deal to take over budget airline HK Express, sources say
The city’s biggest carrier is set to make a formal announcement as early as
Tuesday
The acquisition would leave Cathay Pacific in control of three of Hong Kong’
s four airlines
If the acquisition of HK Express goes through, Cathay Pacific would control
three of Hong Kong’s four passenger airlines. Photo: Bloomberg
Cathay Pacific Airways has agreed a deal to acquire budget airline HK
Express, according to sources familiar with the matter.
Hong Kong’s biggest airline is poised to make a formal announcement as early
as Tuesday, though the sources did not elaborate on the agreement between the
two sides, including the financial terms.
Facing competitive pressures from a trio of rivals including no-frills
carriers, jumping into the low-cost travel market could allow Cathay Pacific
to attract budget-conscious travellers it does not already serve.
Three weeks ago, Cathay Pacific confirmed it was in active discussions to
acquire HK Express from debt-ridden Chinese conglomerate HNA Group. The
financial concerns of the parent group have spread to Hong Kong Airlines, the
full-service sister airline of the low-cost carrier, which was not being
considered in the deal, the company said at the time.
Both companies have sought to play down progress on the talks since they were
officially confirmed on March 5, insisting that discussions were continuing,
giving rise to concerns a deal could not be reached.
The confirmation of the deal would mean Cathay Pacific is officially jumping
into low-cost travel, using an airline vehicle designed for budget travel,
without having to cannibalise the luxury, premium offering from its flagship
brand, in its first major acquisition since buying Dragonair in 2006, now
renamed Cathay Dragon.
A source familiar with the deal said one of the first major tasks for Cathay
Pacific would be to decide on shaking up the top team at the budget carrier,
with most executives who came from Hainan Airlines or the corporate parent
HNA, set to leave. The largely Western-led executive team who ran HK Express
since its formation as a low-cost airline in 2013 were cleared out or quit in
late 2017 following a leadership reshuffle.
Last week, CEO Rupert Hogg signalled the budget brand and concept would
continue, assuaging the worries of travellers that low-fare air travel might
disappear with Cathay taking over the city’s only budget carrier.
Having faced a wave of competitive threats on multiple fronts, Cathay Pacific
would, with its new acquisition, be in a unique position to weather the
challenges. The company has two major shareholders from China and the Middle
East. Air China is a long-standing investor, with a 29.99 per cent stake in
the airline and Cathay in turn owns 18.13 per cent. Qatar Airways also has a
9.99 per cent stake.
Two weeks ago, Cathay Pacific announced it had returned to an annual profit
for the first-time in three years, earning HK$2.3 billion.
Last week, CEO Rupert Hogg signalled the budget brand and concept would
continue in the event of Cathay acquiring HK Express. Photo: Bloomberg
Last week, CEO Rupert Hogg signalled the budget brand and concept would
continue in the event of Cathay acquiring HK Express.
Over several years, the airline has softened its stance on low-cost airlines,
with CEO Hogg stating last summer it would consider starting-up a budget
carrier if and when it was the right time.
At a press conference announcing the airline’s 2018 financial results,
chairman John Slosar, explained the reason behind the U-turn. “In aviation
you can never say never [to low-cost carriers],” he said. “It is such a
dynamic business and things change and you have to be willing to change when
opportunities present themselves.”
Cathay Pacific, focused on long-haul flights, and sister airline Cathay
Dragon which operates Asia-only routes, fly 183 passenger aircraft to 103
non-stop destinations. The pair carried 35.4 million passengers last year.
HK Express flies 24 aircraft to 27 cities – carrying 4.1 million customers –
with a heavy focus on flights to Japan and South Korea.
If the acquisition goes through, Cathay Pacific would control three of Hong
Kong’s four passenger airlines.
Cathay Pacific declined to comment while HK Express did not respond to
queries.
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