Qatar takes 9.6% stake in Cathay Pacific

Alicia Cross
November 8, 2017

The 9.6 percent stake, equivalent to 378,188,000 shares of the Asian carrier, was purchased by Qatar Airways for HK$15.6 billion, or $662 million.

For state-owned Qatar Airways, its first major stake in an Asian airline will allow it to boost its global influence and potentially increase traffic through its Doha hub, amid the worst political crisis in years among the Gulf Arab states.

Hong Kong conglomerate Swire Pacific remains the largest shareholder in Cathay with a 45 per cent stake and Air China controls 29.99 per cent, while the remaining shares not owned by Qatar Airways are publicly traded.

In an unrelated incident, a Qatar Airways Doha-Bali flight was reportedly diverted to Chennai following a jealousy-fuelled on-board disturbance.

The airline has been unable to fly to the previously lucrative markets of the United Arab Emirates and Saudi Arabia as part of an airspace rights dispute with neighbours, and has been looking to invest elsewhere to broaden its reach. In a statement, Cathay Pacific CEO Rupert Hogg, said: "Qatar Airways is one of the world's premier airlines". At the same time the move reasserts the company's global ambitions 4 1/2 months after American Airlines rejected an investment bid. "Cathay Pacific is a fellow Oneworld member and is one of the strongest airlines in the world, respected throughout the industry and with massive potential for the future". It added that Qatar's purchase displays confidence in Cathay's future.

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Cathay, which last year reported its first annual loss in almost a decade, is carrying out a three-year corporate overhaul that includes laying off hundreds of workers as it battles to keep up with intensifying competition from rival Asian carriers.

Complicating matters is the stake already held by Air China, long regarded by investors as a possible purchaser for the whole of Cathay. "This may not necessarily be favorable for Cathay as it is facing operating challenges and undergoing transformation".

Qatar Airways has been trying to compensate for this lost traffic and revenue by increasingly looking at worldwide markets to expand its reach.

In a Hong Kong stock exchange disclosure, Kingboard Chemicals says the group is primarily engaged in the manufacture and sale of products including chemicals, laminates, printed circuit boards, and that the Cathay shares are an investment. Kingboard, which makes laminates and copper foil and had been seen as a possible front for a takeover of Cathay, according to Bocom International analyst Geoffrey Cheng, said its investment has yielded a profit of about HK$800 million.

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