Cathay Pacific Airways Ltd revealed it is engaged in active negotiations regarding a potential acquisition of Hong Kong Express Airways Ltd, though no agreement has been finalized. The move aims to strengthen its presence in the budget travel sector, where limited airport slot availability has hindered growth compared to competitors like Singapore Airlines and Qantas.
The airline has redirected some routes to its regional subsidiary, Cathay Dragon, as part of a cost-cutting and revenue-boosting strategy. It has ordered 32 Airbus A321neos for Cathay Dragon, signaling a shift toward low-cost operations. Cathay clarified its public statement followed media speculation about talks to acquire HK Express and Hong Kong Airlines from HNA Group, a Chinese conglomerate facing financial challenges.
While Cathay did not disclose the transaction’s value or stake size, a 2018 estimate suggested HK Express could be valued at around $300 million. Analysts remain divided on the deal’s potential, with some questioning synergies due to overlapping routes, while others see opportunities to tap into a new passenger segment.
Cathay’s shares rose 3% on Tuesday, reflecting investor optimism despite ongoing debates about its budget airline strategy. The airline has struggled to launch a standalone low-cost brand, citing airport slot limitations. Cathay CEO Rupert Hogg noted that a third runway at Hong Kong International Airport, scheduled for 2024, could ease these constraints.
HNA Group, which owns HK Express, is restructuring after a $50 billion global acquisition spree. The budget airline operates 25 A320 family aircraft to Asian destinations, according to FlightRadar24 data.
