Cathay announced late Wednesday that Qatar Airways had approached it with an offer to sell its stake, which Cathay will repurchase through a buyback at HK$10.8374 per share — about a 4% discount to the airline’s last closing price.
The deal, which gives Qatar Airways a 35% premium over the price it originally paid in 2017, marks the Gulf carrier’s complete exit from the Hong Kong airline. Cathay said it would fund the repurchase through internal resources and existing credit lines.
“I don’t think there’s anything special to read into it,” said Kenny Ng Lai-yin, securities strategist at China Everbright Securities International. “It’s more likely about Qatar Airways having their own cash needs.”
Ng added that the buyback should boost Cathay’s share price by reducing the number of shares in circulation and easing selling pressure. Following the announcement, Cathay shares jumped 4.8% on Thursday, while Air China gained 4% and Swire Pacific rose more than 1%.
Strategic Exit and Long-Term Outlook
Qatar Airways had acquired the stake in November 2017, becoming Cathay’s third-largest shareholder after Swire Pacific and Air China. The investment marked Qatar’s first major foray into an Asian carrier, aimed at expanding its global reach and boosting traffic through its Doha hub.
However, Qatar never held board representation at Cathay, limiting its strategic influence. Before the investment, both airlines had operated a codeshare route between Hong Kong and Doha (2014–2016), which was later discontinued for commercial reasons.
Qatar Airways CEO Badr Mohammed Al-Meer said the divestment reflected a disciplined portfolio strategy, coming on the back of strong financial results.
“This move allows us to optimise our investments and position the company for long-term growth,” he said.
The airline has pursued a global partnership strategy, holding stakes in British Airways parent IAG, LATAM Airlines Group, and Virgin Australia.
Cathay Strengthens Balance Sheet
Cathay Chairman Patrick Healy said the buyback underlined the airline’s confidence in its recovery and future growth. The company has committed HK$100 billion over seven years to renew its fleet, enhance cabin products, and upgrade lounges.
Cathay is steadily rebounding from pandemic-era losses that crippled Hong Kong’s aviation sector. Passenger numbers for Cathay and its low-cost unit HK Express rose 20% year-on-year in September, reflecting improving travel demand.
Following the buyback, Swire Pacific’s stake in Cathay will increase from 43.12% to 47.69%, while Air China’s shareholding will rise from 28.74% to 31.78%.
Despite Qatar Airways’ exit, both airlines confirmed that their partnership within the oneworld Alliance would continue.
Summary:
- Qatar Airways sells 9.7% Cathay Pacific stake for HK$6.97 billion.
- Cathay funds buyback using internal and existing credit resources.
- Shares of Cathay rise 4.8% following announcement.
- Sale aligns with Qatar’s global investment reshuffle and Cathay’s post-pandemic growth plan.