The acquisition by Middle Eastern carrier Qatar Airways of shares in Cathay Pacific Airways is expected to potentially complicate the Hong Kong flag carrier’s restructuring plan aimed at pruning costs and reverting to profit, according to industry watchers.
Qatar Airways announced earlier that it paid Hong Kong-based Kingboard Chemical Holdings HKD5.16 billion (US$661.461 million) for its 9.6% stake in the company, making the Doha-based airline Cathay Pacific’s third biggest shareholder.
Beijing-based Air China and Swire Pacific together continue to hold 74.99% shares of the airline. Hong Kong conglomerate Swire Pacific remains the largest shareholder with a 45% stake, while Air China controls 29.99%, with the remaining shares not owned by Qatar Airways being publicly traded.
One analyst said the entry of the new shareholder could potentially complicate restructuring and relations with the existing shareholders of Asia’s largest international airline.
Another noted that the three major shareholders have different and potentially conflicting interests that may not bode well for Cathay as it continues to face operating challenges and undergo transformation.
There is also the fact that Air China and Qatar Airways, both being state-owned, have political interests that may bring friction into their relations, said another observer.
Qatar Airways has been seeking investments in other airlines but recently dropped a bid to buy into American Airlines, which rejected its overtures. Qatar Airways already has a 20% stake in British Airways owner International Airlines Group, 10% in South America’s largest carrier LATAM and 49% in Italian airline Meridiana.
An executive of Qatar Airways told media they had wanted to buy a bigger stake in Cathay Pacific but “that was all that was on offer,” adding they would be interested to buy more if this becomes possible.
In a statement released November 6, Cathay Pacific said that with the buy-in by Qatar Airways, “both Cathay Pacific and Qatar Airways collaborate together as members of the oneworld alliance.”
Cathay Pacific CEO Rupert Hogg said, “Qatar Airways is one of the world’s premier airlines. We already work together closely as fellow members of the oneworld alliance and we look forward to a continued constructive relationship.”
In January of this year Cathay Pacific had bared plans to downsize, saying it was reviewing its organizational structure and effecting a massive revamp, an operational cost reduction, and job layoffs amid stronger competition and increased global economic volatility.
Last May, the company announced it was making around 600 people redundant in its head office as part of “a transformation programme to make Cathay Pacific and Cathay Dragon more effective by improving the speed and quality of decision-making and putting a greater focus on its customers.”
Photo: InSapphoWeTrust
