Cathay in talks to buy stakes in HK Express and HK AirlinesTop News | Bloomberg and Avery Chen 28 Feb 2019
Cathay Pacific Airways (0293), Asia's biggest international carrier, is weighing whether to bid for stakes in Hong Kong Express Airways and Hong Kong Airlines, which are under the control of embattled Chinese conglomerate HNA Group.
Cathay Pacific has held preliminary talks with HNA about acquiring minority stakes in the two carriers.
HNA has already trimmed one of China's biggest debt piles by selling off dozens of assets, from hotels to stakes in aircraft leasing companies.
Its plan to sell almost a third of its stake in Hong Kong Airlines was held up last year after the sudden death of HNA co-chairman Wang Jian.
Hong Kong Airlines and Hong Kong Express would be attractive to Cathay because of the routes they have the rights to fly.
But people with knowledge of Cathay's discussions with HNA say the talks have been moving slowly and there is no certainty they would end in a double deal being struck.
There was also another cloud for Hong Kong Airlines with two firms yesterday suing Hong Kong Airlines for HK$150.4 million in unpaid fees for leasing aircraft.
The Air Transport Licensing Authority said in a statement it is gravely concerned about the claims being made by the Los Angeles-headquartered International Lease Finance Corp and London-based Wilmington Trust SP Services against Hong Kong Airlines.
The authority has asked the carrier to explain the situation and said it would be monitoring the case and was ready to take follow-up action.
Cathay Pacific has meanwhile fired at least 600 workers and pared back some of its overseas operations after wrong bets on fuel hedges ended with losses.
The carrier has also been facing intensifying competition from budget airlines as well as from Middle Eastern rivals offering ultra-luxury amenities.
Still, it forecasts an end to a record two-year run of losses and expects to announce next month a profit for 2018. Its shares jumped as much as 8.8 percent on Wednesday of last week when Cathay made that known.