HONG KONG, March 27, 2019 (BSS/AFP) – Hong Kong flag carrier Cathay
Pacific announced Wednesday that it will buy budget airline HK Express for
US$628.15 mn, as it moves to counter competition from the increasing number
of low-cost carriers in the region.
The HK$4.93 bn acquisition leaves Cathay Pacific in control of three of
the four airlines in Hong Kong, adding to its namesake carrier and regional
subsidiary Cathay Dragon.
Hong Kong Express is the city’s sole budget carrier — a sector of the
industry that a marquee brand like Cathay has struggled to compete against.
Hong Kong Express is owned by HNA Group, a struggling Chinese conglomerate
that has been looking to lower its debt pile. The group also owns Hong Kong
Airlines, another Cathay competitor that has found itself in financial
difficulties in recent months.
Cathay has been overhauling its business after posting its first losses
for eight years in 2016, firing more than 600 workers and paring overseas
offices and crew stations as it faces stiff competition from budget rivals in
China.
It has also added international routes and better on-board services in a
bid to compete with well-heeled Middle Eastern long-distance carriers.
The overhaul appears to have paid off. Earlier this month Cathay Pacific
announced a net profit of HK$2.35 billion ($299 million) last year, ending
two successive annual losses.