Qatar Airways Exits Cathay Pacific with $897 Million Stake Sale

HONG KONG, Nov 5 (Reuters) – Qatar Airways has announced its decision to sell its entire 9.7% stake in Cathay Pacific Airways for approximately $897 million, marking a complete exit from the Hong Kong airline after eight years. Cathay confirmed late Wednesday that the Doha-based airline approached them with the proposal.

Cathay will repurchase the shares through a buyback at a rate of HK$10.8374 per share, which is roughly a 4% discount compared to its last closing price. This transaction comes as Qatar Airways seeks to optimize its investment portfolio following a period of robust financial results.

Originally, Qatar Airways acquired its stake in November 2017, making it the third-largest shareholder in Cathay, trailing only Swire Pacific and Air China. The Hong Kong carrier noted it is offering a 35% premium over the price Qatar initially paid to buy back its shares, and will fund the deal using internal resources and existing credit lines.

Kenny Ng Lai-yin, a securities strategist at China Everbright Securities International, commented, “I don’t think there’s anything special to read into it. I think it’s more likely about Qatar Airways having their own cash needs.” He believes the buyback will positively impact Cathay’s stock by reducing the number of shares available on the market.

In early trading Thursday, Cathay’s shares rose 4.8%, while Hong Kong-listed shares of Air China and Swire Pacific also saw gains. Cathay, based at the busiest cargo airport globally, is one of the region’s leading cargo carriers, benefiting from an increase in e-commerce out of China.

Despite Qatar’s exit, both airlines have pledged to continue their collaboration through the Oneworld Alliance. Qatar Airways CEO Badr Mohammed Al-Meer stated that the exit aligns with their disciplined portfolio strategy.

Although Cathay experienced significant losses during the COVID-19 pandemic, leading to travel restrictions, its business is recovering. In September, Cathay and its budget subsidiary HK Express reported carrying 20% more passengers compared to the previous year.

If the buyback is approved, Swire Pacific’s ownership in Cathay will rise to 47.69%, while Air China’s will increase to 31.78%. Cathay Chairman Patrick Healy expressed that this buyback demonstrates strong confidence in the airline’s future direction, highlighting an investment plan of HK$100 billion over seven years for fleet renewal and infrastructure enhancements.