Cathay Pacific to buy budget airline HK Express for $850m
HONG KONG : The Hong Kong flag carrier Cathay Pacific said yesterday it will buy budget airline HK Express for HK$4.93 billion (S$850 million) as it moves to counter competition from the increasing number of low-cost carriers in the region.
The move is its first foray into the budget sector and will leave Cathay controlling three of four airlines at one of Asia's busiest airports at a time of huge growth in the region's air industry.
It comes weeks after the carrier said it had swung back into the black last year following two years of losses and will help ease concerns after a data breach that dented the company's reputation and could prove costly.
"HK Express captures a unique market segment," Cathay said in a statement.
"This represents an attractive and practical way for the Cathay Group to support the long-term development and growth of our aviation business and to enhance the competitiveness of the Hong Kong hub during a time of intense regional competition."
Cathay will pay HK$4.93 billion for the airline in a deal that is due to be completed by December, says a filing announcement.
It will continue to operate HK Express as a "standalone airline using the low-cost carrier business model".
"The transaction is expected to generate synergies as the businesses and business models of Cathay Pacific and HK Express are largely complementary," it added.
HK Express is the city's sole budget carrier - a sector that Cathay has struggled to compete against. - AFP