Copyright indiatimes
State-owned Qatar Airways has decided to sell its entire stake in Cathay Pacific Airways for about $897 million (HK$6.97 billion), marking its complete exit from Hong Kong's flagship airline after eight years.Cathay said late on Wednesday that the Doha-based carrier had approached it about selling its entire 9.7% stake, and it would repurchase the shareholding through a buyback at HK$10.8374 per share, roughly a 4% discount to its last closing share price.The Gulf carrier had bought the stake in November 2017, making it the third-largest shareholder in Cathay after Swire Pacific and Air China.Shares of Cathay rose 4.5% in early trade on Thursday, while the Hong Kong-listed shares of Air China climbed 3% and Swire Pacific's stock was up more than 1%.Based at the world's busiest cargo airport, Cathay is one of Asia's largest cargo carriers and has benefited from rising volumes of e-commerce out of China.EXIT STRATEGY ALLOWS FOR 'LONG-TERM GROWTH'Cathay was Qatar Airways' first major investment in an Asian airline and was aimed at boosting its global influence and increasing traffic through its Doha hub. There were no Qatar-nominated directors on Cathay's board, meaning it had little influence over the Swire Pacific-managed airline.Live EventsPrior to Qatar Airways' investment, Cathay flew between Hong Kong and Qatar's Doha hub as part of a codeshare arrangement between 2014 and 2016, but the route was axed "for commercial reasons".Qatar Airways CEO Badr Mohammed Al-Meer said the exit reflected the company's disciplined portfolio strategy and followed a period of strong results, allowing the company to optimise investments and position itself for long-term growth.The Middle Eastern airline has pursued a strategy of investing in airlines worldwide to strengthen its competitive position, including in British Airways parent IAG, South American carrier LATAM and Virgin Australia .Cathay is paying roughly a 35% premium over the price Qatar Airways originally paid for the stake to buy it back. The Hong Kong carrier said it would fund the deal through internal resources and existing credit lines.Cathay Chairman Patrick Healy said the stake buyback reflected "strong" confidence in the company's future. The airline has laid out an investment plan of HK$100 billion over seven years that includes fleet renewal, cabin products and lounges. Cathay suffered prolonged losses during the COVID-19 pandemic, with Hong Kong one of the last global destinations to end travel restrictions. Cathay's business is recovering, with the airline and budget subsidiary HK Express carrying 20% more passengers in September than a year earlier.If the buyback of the Qatar Airways stake is approved, Swire Pacific's stake in Cathay will rise to 47.69% from 43.12%, while Air China's shareholding will increase to 31.78% from 28.74%.Cathay and Qatar Airways said they would continue their partnership through the oneworld Alliance.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onQatar AirwaysCathay PacificCathay Pacific buybackQatar Airways investmentHK Pacific stakeQatar Airways exitHong Kong airline news (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News onQatar AirwaysCathay PacificCathay Pacific buybackQatar Airways investmentHK Pacific stakeQatar Airways exitHong Kong airline news(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless Explore More Stories123
