Qatar Airways snaps up 9.6% of Cathay Pacific Airways

A Qatar Airways plane takes-off from the Hamad International Airport in Doha

Cathay Pacific Airways dropped in Hong Kong after Qatar Airways agreed to buy a stake to become the Hong Kong-based carrier's third biggest shareholder.

Cathay Pacific chief executive Rupert Hogg described Qatar as "one of the world's premier airlines".

"Cathay Pacific is a fellow Oneworld member and is one of the strongest airlines in the world, respected throughout the industry and with massive potential for the future", Qatar CEO Akbar Al Baker said in a prepared statement. According to Reuters, Qatar Airways bought roughly 378 million of Cathay Pacific's shares from Hong Kong's Kingboard Chemical Holdings for about US$661 million.

Both airlines already collaborate together as members of the oneworld alliance.

It's a move that appears to signal the Qatar carrier's confidence in the Hong Kong airline's ability to rebound from its recent financial struggles, largely the result of increasing competition from the Middle Eastern airlines as well as mainland Chinese and low-priced carriers.

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Qatar Airways' investment strategy has seen it acquire 20 per cent of British Airways-parent International Consolidated Airlines Group, 10 per cent of South America's Latam Airlines Group and 49 per cent of Italy's Meridiana.

Hong Kong conglomerate Swire Pacific owns 45 per cent of Cathay, state-owned Air China has 30 per cent and the rest is publicly traded.

Mr Will Horton, a Hong Kong-based senior analyst at CAPA Centre for Aviation, said that while Qatar Airways' investment in Cathay was likely to be passive, difficulties could arise if the two carriers tried to better integrate their hubs. The route was axed "for commercial reasons". It also removed its CX code from Qatar-operated flights beyond Doha.

In particular, the rapid growth of Chinese carriers on worldwide routes has reduced the number of passengers from China transiting through Cathay's Hong Kong hub.

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