Cathay Pacific Airways has agreed terms to purchase budget carrier HK Express (HKE) from Chinese conglomerate HNA Group. The details were contained within a filing to the Hong Kong Stock Exchange on March 27, which reveals that Cathay will pay HK$4.93bn (£474.9m) as part of the acquisition, which is expected to be completed before the end of the year. The purchase will be made in cash and through promissory loan notes.
As part of the statement to the stock market, Cathay stated the deal “is expected to generate synergies as the businesses and business models of Cathay Pacific and HKE are largely complementary. The transaction represents an attractive and practical way for the Cathay Pacific Group to support the long-term development and growth of its aviation business and to enhance its competitiveness.”
It is understood that Cathay intends to operate HKE as a wholly-owned standalone airline using the low-cost carrier business model. It is not yet clear is if there will be any change in brand identity for the budget carrier once the deal is completed.
HKE currently operates an all-Airbus fleet consisting of 13 A320s and 11 A321 examples, which will complement those of Cathay Dragon – the group’s existing regional carrier.
The statement continued to state that the acquisition is “conditional upon certain conditions being fulfilled, including clearances required from relevant competition authorities, consents under relevant contracts of HKE and the termination or variation of certain arrangements between HKE and its related parties.”