Qatar Airways is now the proud owner of 9.61% of Cathay Pacific, expanding its airline investment portfolio. The shares will be purchased from Hong Kong’s Kingboard Chemical Holdings at a price of roughly $661 million. That appears to be a small premium to the shares closing price on the Hong Kong Stock Exchange last Friday. The transaction comes after Qatar’s most recent effort – an investment in American Airlines – was rebuffed.
— Seth Miller (@WandrMe) November 6, 2017
This time around getting access to the shares came somewhat easier. Kingboard has been looking to offload its holdings since the summer and isn’t particularly keen on the way Swire (the primary shareholder) is running things. Which isn’t too hard to believe given recent performance.
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. – Qatar Airways Group Chief Executive, His Excellency Mr Akbar Al Baker
Qatar Airways also owns a 20% stake in IAG (parent of British Airways, Iberia, Aer Lingus and Vueling), a 10% stake in LATAM, and a 49% stake in Meridiana. The company’s stated investment goals involve a mostly passive presence. Qatar says it chooses solid performing airlines and lets them run as normal. It is less clear that the carrier adheres to that plan. Some LATAM aircraft are now flying in the Qatar fleet, for example, while the future of Meridiana’s route network remains unclear. Still, the approach is far more likely to be successful than Etihad’s plan to bail out obviously struggling airlines.
That Qatar Airways had a formal press release and Cathay Pacific did not suggests that there is still some coordination necessary to bring the new shareholder into the mix.
It will also be interesting to see if Qatar Airways and Cathay Pacific coordinate more tightly in loyalty programs or seek permission for joint venture operations on various routes. There is significant potential to “fight back” against the Qantas/Emirates partnership and to otherwise improve capacity and flow in some markets should the two choose such (and receive governmental approvals).
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