thomaschan100
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Will Cathay Pacific acquire Hong Kong Airlines?

Mon Dec 24, 2018 5:54 am

Currently, there are lots of rumours about HX cannot repay huge amout of debts, will CX help HX by purchasing shares from HX?
 
travelhound
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Mon Dec 24, 2018 9:41 am

From a competition perspective you would think this would be discouraged.

I'd suggest cross ownership between China Eastern/Southern and QANTAS would be of more benefit to the Hong Kong economy.
 
raylee67
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Mon Dec 24, 2018 12:00 pm

There is no need for CX to buy HX. HX doesn't have any route authorities or slots that are valuable and CX doesn't have.

However, I would think CX may be interested in snapping up some of HX's aircraft, especially the new A350s. Just like cars, planes depreciate quickly in the first year in service. CX would be able to get almost-new A350 with a liquidation price.

Meanwhile, the financial market seems to think failure of HX is imminent. It has HK$5.7 billion of bonds maturing in Jan 2019 and Mar 2019. The price of those bonds have dropped so much that the Jan 2019 bond now carries a yield of 47% and the Mar 2019 bond carries a yield of 191%. Reportedly, HX has cash flow of HK$0.6 billion. However, since HX is not a listed company, cash flow number may not be up-to-date, and it may as well be able to raise capital elsewhere, or get a short term loan, etc., to cover the payment.
(see news report: https://www.hk01.com/%E8%B2%A1%E7%B6%93 ... 1%E5%8E%98 )

A few senior director of HX, including the vice-chairman and the CFO, have resigned in the last two weeks. It's always a bad sign when you see insiders jump ship.
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zakuivcustom
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Mon Dec 24, 2018 1:22 pm

My take is - the only reason why CX would even bother with HX is if there is a really serious investor willing to ply HX/UO from HNA. Arguably, the two most valuable assets that HX has is its AOC (which would make things a lot easier for somebody that wants to jump into the HKG aviation market, ask Jetstar HK) and its airplane assets. Neither of those valuable assets are something that CX really need anyway (well, maybe a few airplanes, but CX can get those cheaper if HX liquidates and have to sell off their assets for cheap). Without a serious investment, all CX has to do is wait for HX to go out of business, and boom, one (well, two if you count UO also) less competitors.

Not to mention, not like CX is doing all that well themselves. HX is actually in the black for one thing, but possibly doesn’t have the cash flow to repay debts. CX? In the red for a year plus now.
Free Hong Kong! Free China!
 
thomaschan100
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Feb 19, 2019 10:38 am

Although HX had met their obligation in the short term (i.e. USD 550 million by Jan) (supported by the Chinese government)
Currently, there are rumors that HX would like to return more A330s in favour of more A320s. The real value decreases.

There is absolutely more debts to come for HX, how HX is going to deal with it?
 
Luftymatt
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Feb 19, 2019 2:20 pm

I wasn't aware Hong Kong airlines was for sale...
chase the sun
 
zakuivcustom
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Feb 19, 2019 2:32 pm

thomaschan100 wrote:
There is absolutely more debts to come for HX, how HX is going to deal with it?


More bailout?

Luftymatt wrote:
I wasn't aware Hong Kong airlines was for sale...


It's mostly rumors. On the other hand, HNA Group had been trying to offload assets to get much needed cash for awhile, and HX is one of those assets that's worth something.

Last note? We'll see how long that long-haul network to SFO/LAX/YVR last. HX has some ridiculous fares (not just Y but also J) and god knows whether they're making any money on those routes.
Free Hong Kong! Free China!
 
Luftymatt
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Wed Feb 20, 2019 2:06 pm

zakuivcustom wrote:
thomaschan100 wrote:
There is absolutely more debts to come for HX, how HX is going to deal with it?


More bailout?

Luftymatt wrote:
I wasn't aware Hong Kong airlines was for sale...


It's mostly rumors. On the other hand, HNA Group had been trying to offload assets to get much needed cash for awhile, and HX is one of those assets that's worth something.

Last note? We'll see how long that long-haul network to SFO/LAX/YVR last. HX has some ridiculous fares (not just Y but also J) and god knows whether they're making any money on those routes.


I'm not sure I'd pay attention to those rumours, they've only just increased their stake in TAP Air Portugal. Something isn't adding up here...
chase the sun
 
J343
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Wed Feb 20, 2019 4:58 pm

zakuivcustom wrote:
My take is - the only reason why CX would even bother with HX is if there is a really serious investor willing to ply HX/UO from HNA. Arguably, the two most valuable assets that HX has is its AOC (which would make things a lot easier for somebody that wants to jump into the HKG aviation market, ask Jetstar HK) and its airplane assets. Neither of those valuable assets are something that CX really need anyway (well, maybe a few airplanes, but CX can get those cheaper if HX liquidates and have to sell off their assets for cheap). Without a serious investment, all CX has to do is wait for HX to go out of business, and boom, one (well, two if you count UO also) less competitors.

Not to mention, not like CX is doing all that well themselves. HX is actually in the black for one thing, but possibly doesn’t have the cash flow to repay debts. CX? In the red for a year plus now.



Well with the recent news of CX returning into profit, maybe CX acquiring jets from HX might be foreseeable. With regards to AOC, there was an article stating that CX won't rule out any LCC start up.
 
zakuivcustom
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Wed Feb 27, 2019 1:28 pm

(Bumping the thread)

And the rumors are back on:
https://www.bloomberg.com/news/articles ... g-carriers

Seems to be a minority stakes only, though, instead of a full takeover.
Free Hong Kong! Free China!
 
c933103
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Thu Feb 28, 2019 6:17 am

zakuivcustom wrote:
(Bumping the thread)

And the rumors are back on:
https://www.bloomberg.com/news/articles ... g-carriers

Seems to be a minority stakes only, though, instead of a full takeover.

HNA didn't have majority in HX either iirc?
When no other countries around the world is going to militarily stop China and its subordinate fom abusing its citizens within its national boundary, it is unreasonable to expect those abuse can be countered with purely peaceful means.
 
zakuivcustom
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Thu Feb 28, 2019 2:32 pm

c933103 wrote:
zakuivcustom wrote:
(Bumping the thread)

And the rumors are back on:
https://www.bloomberg.com/news/articles ... g-carriers

Seems to be a minority stakes only, though, instead of a full takeover.

HNA didn't have majority in HX either iirc?


https://www.reuters.com/article/us-tema ... SKBN1HO0IX

Technically no. But realistically it's still controlled by some investors affiliated with HNA group, via an "independent" third party player (Frontier Investment Partner).

Either way, just looking back, Temasek (The state fund of Singapore that control SQ/MI/TR) was interested but that didn't went anywhere. Now it's CX's turn.
Free Hong Kong! Free China!
 
Norman99
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Sat Mar 02, 2019 5:09 am

The other asset of interest to CX would be the slots at HKG. I assume if HX went under these would be placed back on the market and be avaliable to other interested airlines.

CX is also in an interesting position. As mentioned, it’s be back in the black and ready to expand, but has a major crewing problem preventing this, due to the current ongoing industrial issues with its flight crew. By having a stake in HX, CX could potentially control these slots from a distance, preventing their release to other airlines, and buying itself some time to sort out these issues.
 
CXGabriel
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Sat Mar 02, 2019 6:03 am

If Cathay is ever interested in having its own low cost carrier, it's a great opportunity to buy HK Express from HKA. Just saying...
 
Yossarian22
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Sat Mar 02, 2019 9:44 am

CXGabriel wrote:
If Cathay is ever interested in having its own low cost carrier, it's a great opportunity to buy HK Express from HKA. Just saying...


Isn’t that essentially what Dragon was a few years ago?
 
VRHNM
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Sat Mar 02, 2019 12:04 pm

[twoid][/twoid]
Yossarian22 wrote:
CXGabriel wrote:
If Cathay is ever interested in having its own low cost carrier, it's a great opportunity to buy HK Express from HKA. Just saying...


Isn’t that essentially what Dragon was a few years ago?


Dragonair was never a LCC :cloudnine:
 
Speedalive
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:16 am

Cathay is in active discussions about an acquisition involving HKE... http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0305/LTN20190305087.pdf
 
lutfi
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:35 am

HKE makes sense for CX, and less likely to raise anti-trust issues - can argue it is a different market segment.

220+ seats in a HK Express A321Neo will give CX group the CASK they need in some markets to compete.
 
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hongkongflyer
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:42 am

And news said that HX is not on sale, just UO
 
zakuivcustom
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:46 am

Not surprised about the latest development at all. HKE AFAIK is fairly profitable, and CX would also be able to both get rid of a competitor and jump into the LCC market without diluting their “main” brand.

lutfi wrote:
HKE makes sense for CX, and less likely to raise anti-trust issues - can argue it is a different market segment.

220+ seats in a HK Express A321Neo will give CX group the CASK they need in some markets to compete.


What anti-trust issue? This is HK not US.
Free Hong Kong! Free China!
 
lutfi
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:57 am

HK does have anti-trust laws - just not so tough
 
c933103
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 2:41 am

lutfi wrote:
HK does have anti-trust laws - just not so tough

There is a competition law but it won't stop companies from merging together
When no other countries around the world is going to militarily stop China and its subordinate fom abusing its citizens within its national boundary, it is unreasonable to expect those abuse can be countered with purely peaceful means.
 
Max Q
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 2:51 am

How many HK based carriers has CX acquired now ?
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juliuswong
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 3:27 am

Max Q wrote:
How many HK based carriers has CX acquired now ?

Hong Kong Airways- back in 1 July 1959
Air Hong Kong - back in June 1994
Dragonair- back in 28 September 2006, became fully owned subsidiary.

Source: Wikipedia (not the best source, I know, lol)
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juliuswong
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 4:06 am

Speedalive wrote:
Cathay is in active discussions about an acquisition involving HKE... http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0305/LTN20190305087.pdf

To come to think of it, few years ago they fought tooth and nail to bar Qantas from setting up Jetstar HK. Now this....
- Life is a journey, travel it well -
 
CXGabriel
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:37 pm

Yossarian22 wrote:
CXGabriel wrote:
If Cathay is ever interested in having its own low cost carrier, it's a great opportunity to buy HK Express from HKA. Just saying...


Isn’t that essentially what Dragon was a few years ago?


Dragonair was never a low cost carrier. It was founded in 1985 to be Cathay's competition, but it struggled to make money and thus Cathay invested in KA in the early 1990's and leased out a couple Lockheed Tristar to KA and modernized its fleet with A320s replacing the old 737-200s. Overtime, KA became the regional arm of CX, and eventually Cathay acquired 100% of KA in 2006.

When I made the statement about HKE a week ago, I thought that it'd be a good idea for CX to explore buying HKE. HKE has a common fleet with KA, has many slots at HKG that are quite valuable, and there's not much overlap (network wise) with KA or CX. With a strategy to build up HKG as a hub, CX has added many new destinations lately, and acquiring HKE will support that strategy and allowed CX to add destinations quickly. HKE would focus on "thin routes" leisure traveling regionally. For example, about a year ago, CX/KA dropped Kota Kinabalu. HKE could pick this up for CX/KA in the future to better compete against Air Asia.
 
usssla
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 1:40 pm

juliuswong wrote:
Speedalive wrote:
Cathay is in active discussions about an acquisition involving HKE... http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0305/LTN20190305087.pdf

To come to think of it, few years ago they fought tooth and nail to bar Qantas from setting up Jetstar HK. Now this....


It is not related to jetstar HK. If Jetstar HK prepared better, it may have set up already.
 
zakuivcustom
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 05, 2019 2:18 pm

juliuswong wrote:
Speedalive wrote:
Cathay is in active discussions about an acquisition involving HKE... http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0305/LTN20190305087.pdf

To come to think of it, few years ago they fought tooth and nail to bar Qantas from setting up Jetstar HK. Now this....


Different times. CX didn’t lose a gajillion dollar for their stupid fuel hedge back when they fought hard against Jetstar HK. Nowaday it is all about keeping cost down.
Free Hong Kong! Free China!
 
 
JeremyXWB
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Wed Mar 06, 2019 1:10 am

Ishrion wrote:


I like it. But at the same time, aft section looks kind of too busy though
 
Obzerva
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Wed Mar 06, 2019 1:37 am

JeremyXWB wrote:
Ishrion wrote:


I like it. But at the same time, aft section looks kind of too busy though


I'm not sure you'd want the premium carrier's logo so prominent on the budget carrier offshoot - sends a mixed message.
Even KA has a different colour to distinguish it as the regional arm of CX.

You don't see the main carrier logo on SQ with TR, or QF for JQ/3K..., VA with TT, LH with EW, etc etc They all want to deliberately create some distance to their budget airline.
 
CXGabriel
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Cathay purchasing HK Express

Mon Mar 25, 2019 2:28 pm

 
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mercure1
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Mon Mar 25, 2019 3:24 pm

Reports CX has agreed to take on HK express. Announcement as soon as tomorrow

Cathay Pacific agrees deal to take over budget airline HK Express, sources say
https://www.scmp.com/news/hong-kong/tra ... airline-hk
mercure f-wtcc
 
masA380
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Mon Mar 25, 2019 3:39 pm

CXGabriel wrote:
Yossarian22 wrote:
CXGabriel wrote:
If Cathay is ever interested in having its own low cost carrier, it's a great opportunity to buy HK Express from HKA. Just saying...


Isn’t that essentially what Dragon was a few years ago?


Dragonair was never a low cost carrier. It was founded in 1985 to be Cathay's competition, but it struggled to make money and thus Cathay invested in KA in the early 1990's and leased out a couple Lockheed Tristar to KA and modernized its fleet with A320s replacing the old 737-200s. Overtime, KA became the regional arm of CX, and eventually Cathay acquired 100% of KA in 2006.

When I made the statement about HKE a week ago, I thought that it'd be a good idea for CX to explore buying HKE. HKE has a common fleet with KA, has many slots at HKG that are quite valuable, and there's not much overlap (network wise) with KA or CX. With a strategy to build up HKG as a hub, CX has added many new destinations lately, and acquiring HKE will support that strategy and allowed CX to add destinations quickly. HKE would focus on "thin routes" leisure traveling regionally. For example, about a year ago, CX/KA dropped Kota Kinabalu. HKE could pick this up for CX/KA in the future to better compete against Air Asia.

Looks like AirAsia is predominantly a threat to them among all LCC carriers so much so that they wanna kill their monopoly on certain routes so to speak.
 
juliuswong
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Mon Mar 25, 2019 3:46 pm

HNA just handled over its only survival tool to her competitor in a silver platter. CX must be really happy they did not need to spend too much money in setting up a new LCC subsidiary from scratch.
- Life is a journey, travel it well -
 
flyer56
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Re: Cathay purchasing HK Express

Mon Mar 25, 2019 4:43 pm

I think long term this is good for both airlines. HK is not such a large market that it could support 3-4 competing airlines. Hopefully CX will segment leisure and price sensitive routes better and stop trying to use CX crew and planes to compete with LCCs. Now we just need a better parent for HX...
 
zakuivcustom
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Re: Cathay purchasing HK Express

Mon Mar 25, 2019 6:23 pm

flyer56 wrote:
I think long term this is good for both airlines. HK is not such a large market that it could support 3-4 competing airlines. Hopefully CX will segment leisure and price sensitive routes better and stop trying to use CX crew and planes to compete with LCCs. Now we just need a better parent for HX...


It may be good for airlines (and definitely VERY good for Cathay), but IMHO bad for customers. Cathay now has pricing power in the LCC sector also, and chances are, those low fares that UO throw out once every so often are history.

Hard to tell what'll happen to HX. They're in a limbo with HNA not having much money, and it's increasingly unlikely that CX will take over HX as well.
Free Hong Kong! Free China!
 
lalib
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Re: Cathay purchasing HK Express

Mon Mar 25, 2019 6:35 pm

Great!

"Cathay Express" has a nice ring to it
 
kriskim
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Re: Cathay purchasing HK Express

Mon Mar 25, 2019 10:21 pm

CX finally enters the LCC market! Though I don't think it would make much sense to rebrand it to 'Cathay Express' or the like as it would dilute the current Cathay Pacific and Cathay Dragon brands, too many 'Cathy's' will confuse pax. By keeping it as Hong Kong Express, there would be a clear distinction between market segments.

I wonder if CX will try and experiment with LCC long haul using UO, giving them a few A330's to start off with.
A world built upon connectivity.
 
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OA940
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Re: Cathay purchasing HK Express

Mon Mar 25, 2019 10:23 pm

Hope they don't change HK Express and just keep it as a seperate airline. That livery is a stunner!
A350/CSeries = bae
 
downdata
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Re: Cathay purchasing HK Express

Mon Mar 25, 2019 10:37 pm

flyer56 wrote:
I think long term this is good for both airlines. HK is not such a large market that it could support 3-4 competing airlines. Hopefully CX will segment leisure and price sensitive routes better and stop trying to use CX crew and planes to compete with LCCs. Now we just need a better parent for HX...


From the pax perspective, CX has always offered premium econ or at least business cabins on their routes even if they compete with LCCs in their economy cabins. All that will happen now is prices will go up 50% while economy product stay as it is (10 abreast 77W).
 
c933103
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Re: Cathay purchasing HK Express

Tue Mar 26, 2019 2:20 am

[url]https://news.mingpao.com/pns/經濟/article/20190325/s00004/1553453135880/快運鍾國頌-與海航意見分歧-首向外解釋「糾紛」-稱無意撤出快運[/url]
Meanwhile, the person who currently hold 47.5% HK Express stock indirectly and have close relationship with HNA group despite earlier conflicts claim he have no plan to exit HK Express
When no other countries around the world is going to militarily stop China and its subordinate fom abusing its citizens within its national boundary, it is unreasonable to expect those abuse can be countered with purely peaceful means.
 
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janders
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 26, 2019 2:22 am

Well certainly gives CX a more comprehensive product portfolio.
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VTCIE
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Re: Cathay purchasing HK Express

Tue Mar 26, 2019 2:26 am

Perhaps Cathay Dragon and HK Express may merge in the next ten to fifteen years, keeping one name or the other, much like SilkAir and Scoot.
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Re: Cathay purchasing HK Express

Tue Mar 26, 2019 2:32 am

lalib wrote:
Great!

"Cathay Express" has a nice ring to it


Or as the locals would pronounce it “KafeY Express”, may as well call it “Espresso”
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c933103
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Re: Cathay purchasing HK Express

Tue Mar 26, 2019 2:44 am

VTCIE wrote:
Perhaps Cathay Dragon and HK Express may merge in the next ten to fifteen years, keeping one name or the other, much like SilkAir and Scoot.

Can't see it happening, Cathay Dragon is regional while HK Express is LCC
When no other countries around the world is going to militarily stop China and its subordinate fom abusing its citizens within its national boundary, it is unreasonable to expect those abuse can be countered with purely peaceful means.
 
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LAXintl
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 26, 2019 2:48 am

I am sure CX will also be able to drive efficiency between the airlines as well. For example Airbus training and engineering, back office admin support etc.
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c933103
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 26, 2019 2:55 am

juliuswong wrote:
Speedalive wrote:
Cathay is in active discussions about an acquisition involving HKE... http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0305/LTN20190305087.pdf

To come to think of it, few years ago they fought tooth and nail to bar Qantas from setting up Jetstar HK. Now this....

Cathay group have also talked about setting up their own LCC from a while ago, just that the plan was to start after completion of the third runway
When no other countries around the world is going to militarily stop China and its subordinate fom abusing its citizens within its national boundary, it is unreasonable to expect those abuse can be countered with purely peaceful means.
 
juliuswong
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Re: Will Cathay Pacific acquire Hong Kong Airlines?

Tue Mar 26, 2019 3:46 am

c933103 wrote:
juliuswong wrote:
Speedalive wrote:
Cathay is in active discussions about an acquisition involving HKE... http://www3.hkexnews.hk/listedco/listconews/sehk/2019/0305/LTN20190305087.pdf

To come to think of it, few years ago they fought tooth and nail to bar Qantas from setting up Jetstar HK. Now this....

Cathay group have also talked about setting up their own LCC from a while ago, just that the plan was to start after completion of the third runway

By then, CX would be too late for LCC party. Now that buying over a current LCC it saves them time and money. I do pity staff who will eventually lose their jobs due to back office and operation integration. UX A320 fleet fits in well with KA's.
- Life is a journey, travel it well -
 
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aemoreira1981
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Re: Cathay purchasing HK Express

Tue Mar 26, 2019 3:49 am

I see this more for fleeting than the actual airline itself. Cathay Dragon now has its A320 and A321 replacements in the bag (I presume the remaining 7 A320neos due on lease from Norwegian Air Shuttle or SMBC will still be taken up; HK Express had signed up to lease 12 frames from the Norwegian order book). Cathay Dragon has some A320s and A321s more than 20 years old.

As for HK Express' fleet---it is 20 leased from third parties (10 A321s and 1 A320 from Bank of Communication, 2 from China Merchant Bank, 5 from Sumitomo Mitsui Banking Corporation, previously Norwegian Air Shuttle, and 2 from DVB Bank) and 4 owned by current parent HNA Group via Avolon Aerospace...originally an external CIT Group lease. Those 4 (3 A320, 1 A321) will likely remain owned by the HNA Group.

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