Cathay Pacific Airways made its expected move into the low-cost market, announcing the acquisition of Hong Kong Express Airways.
Cathay will pay US$628.1 million for the business and HK Express will become a wholly-owned subsidiary of Cathay.
It is paying US$287 million in cash and US$341 million in loan notes to cash-strapped HNA Group which has been looking to offload its Hong Kong airline businesses for some time to reduce its debt burden.
The deal doesn’t include full-service carrier Hong Kong Airlines which HNA also owns.
The deal is expected to be completed by the end of 2019.
Cathay CEO Rupert Hogg sees the low-cost sector as a ‘unique market segment’ that will help stimulate new demand for the airline group.
It will ultimately make Cathay more competitive across regional Asia routes against Mainland China rivals, he says.
Although it becomes wholly owned, it will remain a standalone business with the Cathay group and will continue to offer a low-cost product.
HK Express flies across heavily trafficked Asia routes linking Hong Kong with Japan, South Korea and beyond.
