Cathay Pacific purchases HK Express Airways as it seeks to enter the low-budget travel market
- 9 months ago
Cathay Pacific Airways announced it will purchase Hong Kong Express Airways from HNA Group for a figure believed to be around $628.1 million, thus enabling it enter the increasing budget travel market.
Cathay stated that the purchase price comprises 2.25 billion Hong Kong dollars of cash and 2.68 billion Hong Kong dollars of non-cash consideration through promissory loan notes, adding that it intends to continue operating HK Express by using a low-cost method.
The move makes sense for HK Express as it reported a 141 million Hong Kong dollars net loss in 2018 and had a net asset value of 1.12 billion Hong Kong dollars.
Additionally a lack of slots at Hong Kong International Airport had constrained Cathay’s ability to follow peers like Singapore Airlines and Qantas Airways and set up its own budget brand.
Cathay Chief Executive Rupert Hogg told Reuters last week he believed low-cost airlines met a “unique market segment” not captured by the Hong Kong carrier at present and helped to stimulate new travel demand.
Source: Smart Trend Team