Kingboard Chemical announced selling a 9.61% share in Cathay Pacific Airways to Qatar Airways, making the latter the third-biggest stakeholder in Hong Kong’s flag carrier. This is also the first Middle Eastern investment into an East Asian airline.
Kingboard Chemical announced the agreement of selling 9.61% of the total issued share capital of Cathay Pacific to Qatar Airways on November 5, 2017. The purchase makes Qatar Airways the third biggest shareholder of Cathay Pacific, falling just under the Swire Pacific and Air China.
The almost $662 million worth purchase will allow Qatar Airways to expand its global reach to mainland China, but for Cathay Pacific, however, the deal might complicate its upcoming plans of restructuring that aims to cut costs by half a billion dollars in three years, Reuters notes.
According to Kingboard Chemical, the deal was “determined with reference to the prevailing market price and was negotiated on an arm’s length basis”. The realization of its investment in Cathay Pacific will provide the company a financial gain of approximately $102 million with regard to the difference in acquisition and disposal prices, Kingboard Chemical announced in a statement.
Cathay Pacific, Hong Kong’s flag carrier, announced in January 2017 the beginning of a three-year restructuring program due to financial losses. The changes, driven by increasing customer expectations, the growth of competition with both the Middle Eastern premium airlines and the low-cost carriers from mainland China, as well as the unpredictable nature of the world economy.