Qatar Airways exits Cathay Pacific with $897 million stake sale | The Express Tribune

State-owned Qatar Airways has decided to sell its entire stake in Cathay Pacific Airways (0293.HK) for about $897 million (HK$6.97 billion), marking its complete exit from Hong Kong’s flagship airline after eight years.

Cathay said late on Wednesday that the Doha-based carrier had approached it about selling its entire 9.7% stake, and it would repurchase the shareholding through a buyback at HK$10.8374 per share, roughly a 4% discount to its last closing share price.

The Gulf carrier had bought the stake in November 2017, making it the third-largest shareholder in Cathay after Swire Pacific (0019.HK) and Air China (601111.SS). Cathay is paying roughly a 35% premium over the price Qatar Airways originally paid for the stake to buy it back. The Hong Kong carrier said it would fund the deal through internal resources and existing credit lines.

“I don’t think there’s anything special to read into it (buying back from Qatar). I think it’s more likely about Qatar Airways having their own cash needs,” said Kenny Ng Lai-yin, securities strategist at China Everbright Securities International.

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Ng said the deal should be positive for Cathay’s stock price as there would be fewer shares floating in the market, meaning less selling pressure. Shares of Cathay rose 4.8% on Thursday, while the Hong Kong-listed shares of Air China climbed 4%, and Swire Pacific’s stock was up more than 1%.

Based at the world’s busiest cargo airport, Cathay is one of Asia’s largest cargo carriers and has benefited from rising e-commerce volumes out of China.

Exit strategy allows for ‘long-term growth’

Cathay was Qatar Airways’ first major investment in an Asian airline, aimed at boosting its global influence and increasing traffic through its Doha hub. There were no Qatar-nominated directors on Cathay’s board, meaning it had little influence over the Swire Pacific-managed airline.

Before Qatar Airways’ investment, Cathay flew between Hong Kong and Doha as part of a codeshare arrangement between 2014 and 2016, but the route was later axed “for commercial reasons.”

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Qatar Airways CEO Badr Mohammed Al-Meer said the exit reflected the company’s disciplined portfolio strategy and followed a period of strong results, allowing it to optimise investments and position itself for long-term growth.

The Middle Eastern airline has pursued a global investment strategy, taking stakes in major carriers such as British Airways parent IAG (ICAG.L), South American carrier LATAM (LTM.SN), and Virgin Australia (VGN.AX).

Cathay Chairman Patrick Healy said the stake buyback reflected strong confidence in the company’s future. The airline has laid out an investment plan worth HK$100 billion over seven years, including fleet renewal, new cabin products, and upgraded lounges.

Cathay suffered prolonged losses during the COVID-19 pandemic, with Hong Kong among the last destinations to lift travel restrictions. The airline’s business is now recovering, with Cathay and its budget arm HK Express carrying 20% more passengers in September than a year earlier.