Hong Kong’s Kingboard Chemical on Monday said it agreed to sell its entire 9.6 percent stake in Cathay Pacific to Qatar Airways for HK$5.16 billion ($661 million)
Kingboard, an investment holding company, said it would recognize a gain of HK$800 million on the sale
Hong Kong’s Kingboard Chemical Holdings on Monday said it had agreed to sell its 9.6 percent stake in Cathay Pacific Airways to Middle Eastern carrier Qatar Airways for HK$5.16 billion ($661 million).
Kingboard, an investment holding company, said it would recognise a gain of HK$800 million on the sale which represented its entire stake in the Hong Kong airline.
Cathay shares have risen by 29.4 percent since the start of January despite the airline in August posting its worst first-half loss in 20 years.
This is not the first time Qatar Airways has taken a stake in another airline. The carrier owns 20 percent of International Consolidated Airlines Group, the parent of British Airways, as well as 10 percent of South America’s LATAM Airlines Group and 49 percent of Italy’s Meridiana.
Qatar Airways and Cathay are both members of the oneworld alliance, as is British Airways and LATAM.
In August, Qatar Airways backed away from a similar plan to buy shares in American Airlines after the Texas-based carrier opposed the move.
Qatar Airways said in June that it intended to buy a 10% stake in the world’s largest carrier. American, however, opposed the unsolicited offer. That came amid as American, Delta and United pressed on with allegations that Qatar Airways — along with fellow Persian Gulf airlines Etihad and Emirates — receive unfair subsidies.
Using that as a rallying cry, the U.S. carriers have been lobbied the U.S. government to restrict their rivals’ flight rights to the United States. All three of the Gulf carriers have vigorously denied the allegations of unfair subsidies.
But American CEO Doug Parker cited that ongoing dispute in voicing his displeasure about Qatar Airways’ since-dropped effort to buy a stake in American.
“(We) aren’t particularly excited about Qatar’s outreach, and we find it puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received over the years from their governments,” Parker said shortly after Qatar Airways’ investment intentions became known in June.
Despite the standoff between American and Qatar Airways, those carriers remain members of the oneworld alliance. As with Cathay Pacific, the partnership allows customers of each airline to earn and redeem miles on each other’s flights.
Those investment plans were met with suspicion by critics at a time when Qatar is embroiled in the region’s worst diplomatic crisis in yearsand is locked in an airspace rights dispute with three other Gulf states.
Shares of Cathay Pacific Airways dropped as much as 4.7 percent on Monday morning after Middle Eastern carrier Qatar Airways bought 9.6 percent stake.