Hong Kong’s flag carrier, Cathay Pacific, has agreed to acquire budget airline Hong Kong Express Airways (HKE) for HK$4.93 billion ($886 million).
In a statement to shareholders, Cathay Pacific said the deal is expected to generate synergies, as the business models of the two airlines 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,” the company said.
Cathay Pacific also noted that it intends to continue operating HKE as a standalone airline using the low-cost carrier business model.
The transaction is expected to complete on or before 31 December 2019.
HKE’s audited net profit after tax for the 2017 calendar year was HK$60 million ($10.8 million).
The airline’s net asset value as of 31 December 2018 was HK$1.119 billion ($201.48 million), and its unaudited net losses after tax last year totalled HK$141 million ($25.39 million).
The deal comes not long after the ACCC and Virgin Australia voiced their concerns over Cathay Pacific’s proposed codeshare expansion with Qantas.