State-owned Qatar Airways has decided to sell its entire stake in Hong Kong-based Cathay Pacific Airways for about $897 million, the companies announced.
The share buyback will end the Qatari carrier’s eight-year involvement with Hong Kong’s flagship airline.
The announcement came late Wednesday in a stock market filing by Cathay Pacific, which saw its shares gain 4.2 per cent on the Hong Kong Stock Exchange on Thursday.
“The buy-back reflects our strong confidence in the future of the Cathay Group and underscores our commitment to the development of the Hong Kong international aviation hub,” Cathay Group chairman, Patrick Healy, said in a statement announcing the sale.
Cathay said the Doha-based carrier had approached it about selling its entire 9.7 per cent stake, and that it would repurchase the shareholding buyback at HK$10.8374 per share, on a roughly 4 per cent discount to its last closing share price.
The airline’s other major shareholders are Swire Pacific and Air China. The plan is subject to shareholder approval.
Qatar Airways, flying out of the sprawling Hamad International Airport in Doha, did not acknowledge the sale itself. However, the Cathay Pacific statement included a comment from its CEO Badr Mohammed al-Meer, saying the move represented the airline’s “disciplined approach to portfolio management and our commitment to delivering sustainable value for our shareholders”.
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“Following a period of record profitability and strong performance, this decision is part of a proactive strategy to optimize our investments and position the group for long-term growth,” al-Meer said.
Qatar Airways had bought its stake in Cathay Pacific in 2017 in a deal valued at the time around $662 million from Hong Kong’s Kingboard Chemical Holdings, making it the third-largest shareholder in Cathay. It marked Qatar Airways’ first major investment in an Asian airline.
Back then, Cathay Pacific faced financial losses and layoffs amid increasing competition from other airlines, but the Hong Kong carrier posted a $1.2 billion profit in the last fiscal year.
Qatar Airways, along with Abu Dhabi-based Emirates and Dubai’s Emirates, are long-haul carriers that link East-West travel.
Their location on the Arabian Peninsula between Europe and Asia have made them a key link in global transit. Qatar Airways also got a boost when the small, energy-rich nation hosted soccer’s 2022 FIFA World Cup.
Qatar Airways had struggled during a years-long boycott by four Arab nations and the coronavirus pandemic. However, it soared to a $2.15 billion profit in its last fiscal year. Qatar Airways also has holdings in International Airlines Group, LATAM Airlines Group, China Southern Airlines, Virgin Australia and South Africa’s Airlink.
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