Qatar Airways broadened its reach globally by acquiring a stake of 9.6% in Cathay Pacific, adding another important investor to the carrier's complicated share register during a time when it seeks to slash costs.
Earlier this year it made a bid to buy 10 percent in American Airlines, the United States' largest carrier, but the deal went sour and Qatari officials eventually said that "it no longer met" Qatar Airways' objective. The investment in Cathay Pacific comes about three months after Qatar Airways said it had ended plans to acquire 10 percent of American Airlines, after that plan was met with resistance in the United States.
Cathay shares fell 3.9 percent by mid-morning in Hong Kong, to HK$12.68.
Qatar is purchasing its 378,000 Cathay shares from Hong Kong-based Kingboard Chemicals Holdings Limited. The bulk of Cathay Pacific stock is held by two major shareholders - Swire Pacific Ltd owns about 45 per cent, while Chinese flag carrier Air China owns about 30 per cent.
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Qatar Airways' investment strategy since 2015 has focused on increasing stakes in airlines based outside the Middle East. "We already work together closely as fellow members of the Oneworld alliance, and we look forward to a continued constructive relationship", said Rupert Hogg, chief executive officer, Cathay Pacific.
Cathay flew between Hong Kong and Qatar Airways' Doha hub as part of a codeshare arrangement between 2014 and 2016. Qatar owns slightly more than 20% of IAG, the parent of British Airways, Iberia, Aer Lingus, Vueling and Level; 10% of South America's LATAM Airlines Group; and 49% of Italian carrier Meridiana.
Cathay is now working through a transformation, or cost-cutting drive as part of efforts to turn around a first half loss for calendar 2017.