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Photo: Hong Kong Express

Cathay buys rival in win-win deal

Cathay Pacific is buying loss-making low-cost rival Hong Kong Express from China’s cash-strapped HNA Group.

In a win-win deal for both sides, Cathay Pacific has agreed to buy its low-cost rival Hong Kong Express Airways from China’s cash-strapped HNA Group.

The HKD$4.93 billion (€557 million) deal is a good price for Cathay, an aviation analyst told BBC radio, and represents a move into the low-cost arena by the full-service airline, which returned to profit last year after two years of losses.

“The transaction represents an attractive and practical way for Cathay Pacific Group to support the long-term development and growth of its aviation business and to enhance its competitiveness,” Cathay says about the deal, which is expected to close by the end of the year.

Chinese competition
Cathay says it aims to operate Hong Kong Express as a standalone airline using a low-cost carrier business model. Cathay has been struggling in recent years against competition from low-cost Chinese carriers and has been through some tough cost-cutting.

Last year, it decided not to renew for 2019 its new summer-only route between Hong Kong and Copenhagen.

HK Express, which flies 25 Airbus A320-family aircraft to destinations in eight countries, made a HKD$141 million net loss in 2018 and has a net asset value of around HKD$1.1 billion.

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