Qatar Airways has been on a shopping spree in the last couple of years to expand its global franchise, and the Gulf airline has agreed to buy a 9.6% stake in Hong Kong-based Asian carrier Cathay Pacific Airways from HK-listed Kingboard Chemical Holdings for $660m.
What This Means for Qatar Air
The state-owned gulf carrier owns 20% of International Aviation Group (IAG), which operates British Airways and Iberia, and acquired a 10% stake in South American Carrier LATAM in 2016 and a 49% stake in Italian regional airline Meridiana earlier this year. The airline has seen its regional business hit by the ongoing Qatari Gulf dispute and is looking to boost global traffic through its Doha Airport hub. It had a bid for a 10% stake in American Airlines rejected in the summer, but this deal will give the airline its first foothold in Asia.
What This Means for Cathay
The HK Airline is in cost-cutting mode as it battles against Chinese carriers at the mid-end and Middle Eastern airlines in premium travel categories. It has cut 600 jobs this year and plans to slash costs by $500m over three years. But while a tie-up with a major middle eastern carrier should be good news, its share price fell 2% on the news – the HK market had been hoping that 30% shareholder Air China eventually buys Cathay and a 10% holding by Qatar complicates matters.
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