Qatar buys 9.6% of Cathay, expanding oneworld investments

Qatar buys 9.6% of Cathay, expanding oneworld investments

On Monday morning Qatar Airways Group announced its acquisition of 9.6% of Hong Kong-based Cathay Pacific for USD662M. Qatar is now the third largest shareholder of Cathay, after Swire Group (45%) and Beijing-based Air China (30%).
The acquisition represents an increase in Qatari ownership of airlines in the oneworld alliance, of which it is a member. The holding company has a 20% stake in International Airlines Group (parent company of British Airways and Iberia) and 10% of LATAM.

Why does this matter?

Qatar has solidified its position in the UK and Europe through their IAG investment. Earlier this year they looked to bolster their position in the Americas by acquiring some shares in American Airlines, but that did not go according to plan.

The investment managers at Qatar are clearly pivoting the company towards Asia. Its a smart play in terms of diversifying their investments. Cathay may be losing money, but it has a very strong brand and network across the Asia Pacific region.

The two brands together make a formidable team – Cathay already codeshares on Qatar’s twice-daily service from Doha to Hong Kong – and both airlines are known for their superb premium products and lounges.

Bygones be bygones?

Cathay and Qatar have a checkered history. In March 2014, Cathay began direct service to Doha with an A330-200, replacing one of Qatar’s daily flights, after the two airlines signed a joint venture agreement which I believe had a revenue sharing aspect to it as well. Less than two years later, they dropped the route for commercial reasons.

While business class loads were low, economy were quite high, with the seats being filled by passengers connecting from markets that Qatar sells tickets below cost in. The route was unsustainable for Cathay.

So, it’ll be interesting to see if it resumes service to Hamad International, where an increasing number of foreign airlines have stopped flying to after the blockade (Lufthansa’s last flight was just over a week ago). If they do, the structure of the agreement should include a deeper revenue sharing aspect, where any losses are covered by Qatar (similar to the agreement I suspect British has with Qatar).

All in all, and interesting turn of events!

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