Cathay Pacific Airways is planning to buy back shares held by Qatar Airways after the latter decided to exit its eight-year investment in the Hong Kong-based carrier.
According to a stock exchange filing, Cathay Pacific will buy back Qatar’s 9.57 per cent stake for HK$6.97 billion ($896 million). The transaction will require approval from at least 75 per cent of Cathay’s shareholders.
Qatar Airways had acquired the stake in late 2017 as part of its broader strategy to invest in global airlines, including British Airways parent IAG SA and Latam Airlines Group SA. The move marked the first investment by a Middle Eastern airline in an East Asian carrier, making Qatar Airways Cathay’s third-largest shareholder at the time.
“The buy-back reflects our strong confidence in the future of the Cathay Group. We are firmly focused on sustainably growing our business to strengthen Hong Kong’s status as a world-class aviation hub,” Patrick Healy, Cathay Group’s chairman, was quoted as saying by Bloomberg.
Cathay Pacific is buying the shares from Qatar Airways at about a 35 per cent premium to the price Qatar originally paid. The Hong Kong-based airline plans to finance the transaction using its internal funds and existing credit facilities.
Following the transaction, Cathay’s publicly traded shareholding will decline to around 20.53 per cent, falling below the minimum required 25 per cent, the company announced. However, the Hong Kong Stock Exchange has granted Cathay a public float waiver, allowing for a reduced free float.
Why did Qatar Airways decide to sell stake?
Qatar Airways stated that the sale is part of its proactive strategy to optimise investments and strengthen long-term growth prospects, adding that it will continue its partnership with Cathay Pacific through the Oneworld alliance, to which both airlines belong.
Recently, Qatar Airways has shifted its focus toward acquiring stakes in smaller carriers, such as 25 per cent in Virgin Australia, 25 per cent in South Africa’s SA Airlink, and a 49 per cent pending acquisition in Rwanda’s RwandAir.
Chairman Patrick Healy said the buyback underscores the company’s strong confidence in its long-term prospects. Cathay has outlined a HK$100 billion, seven-year investment plan focused on fleet upgrades, enhanced cabin products, and improved lounges.
Once the deal receives approval, Swire Pacific’s ownership in Cathay will increase to 47.69 per cent from 43.12 per cent, while Air China’s stake will rise to 31.78 per cent from 28.74 per cent.
(With inputs from Bloomberg and Reuters)
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