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Cathay enters low-cost market with HK Express buy

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Cathay enters low-cost market with HK Express buy

Cathay enters low-cost market with HK Express buy

Cathay Pacific Airways has agreed to buy Hong Kong Express Airways from cash-strapped Chinese conglomerate HNA Group for $628 million, giving it a foothold in the fast-growing budget travel market.

David Pollard reports.

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Cathay enters low-cost market with HK Express buy

Cathay Pacific had wanted to enter the low-cost airline market just like peers Singapore Airlines and Qantas.

But a lack of slots at Hong Kong International airport hindered those ambitions.

That is, until now.

And the purchase of Hong Kong Express Airways from a Chinese conglomerate.

The price: 628 million dollars.

Just under half in cash, the rest through promissory loan notes, Cathay disclosed.

HK Express reported a net loss in 2018, it says.

And will continue to operate as a standalone carrier.

It has 24 Airbus A320 jets, which will up Cathay's share of seat capacity in Honk Kong from 46 to 51 per cent.

Analysts say the move makes strategic sense for the buyer, in the third year of a turnaround plan.

Though one describes it as 'costly', saying it could take years for savings to emerge.

Its seller, HNA Group, is itself more than year into the process of unwinding a 50 billion dollar acquisition spree.




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