My Take Qatar Airways Buys Cathay Pacific Stake
Today it was announced that Qatar Airways would buy a nearly 10% stake in Cathay Pacific. The two carriers are part of the OneWorld Alliance, and already had codeshare agreements and frequent flyer program partnerships. The move comes as Middle East Carriers decide how to manage their portfolio and diversify their assets.
Qatar Airways A380
What this Means
In the short run, this will mean more cooperation between the two carriers. I expect them to begin sharing scheduling info, probably financial information, and expanding their codeshare partnership. From a passenger standpoint, I expect to see more reciprocal frequent flyer benefits, and the ability for more seamless connections. The purchase does not mean that Cathay Pacific will now be owned by Qatar Airways. The SWIRE Group and Air China still own larger shares in the carrier. The first impacts of the deal should not be felt until the contract is approved by regulatory officials in both Qatar and Hong Kong.
Why?
This is an interesting strategy. Etihad Airways, another ME3 carrier, is trying to get rid of its previous bad investment airlines. Two of them are either bankrupt or in bankruptcy court. Qatar Airways, however, was late to start buying up airlines. They have purchased stakes in IAG (British Airways and Iberia), LATAM Airlines in South America, and Meridiana in Italy. They looked into buying shares in American Airlines until the airline’s backlash pushed them away. Their move to buy an airline in Southeast Asia, with an excellent brand reputation, and quality product, is a great idea. This will be able for both airlines to improve their onboard product, standardize their offerings, and provide for better customer experience.
Cathay Pacific Old A340
Landing Thoughts
I am surprised that Qatar Airways bought Cathay shares out of the blue. There were no hints, and it seems that Cathay themselves were surprised. I look forward to seeing the two carriers cooperate further, deepening their relationship beyond Oneworld. This, for now, means that CX will stay in Oneworld and that the prospects of having China Southern and CX in OneWorld are fairly high. This purchase will probably end up angering US carriers, but it is nothing new to them. I hope this will push American Airlines to play nice with Qatar and have their issues resolved. Only time will tell if that happens. For now, I am very excited to see how QR and CX enhance their partnership.
What do you think? Is this partnership a good idea? Let us know!
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H/T: Bloomberg
Images from Wikimedia.
I don’t think you understand that Qatar bought a minority stake from another minority investor, without any cooperation from management or the controlling shareholders. There is absolutely no reason to think that this will mean anything for Cathay — except where to send dividend checks. Qatar will have absolutely no say, much less control, over what happens at Cathay.
Hello The Apple Pan! Thanks for reading!
The fact that they bought from a minority investor, without any cooperation, sounds like hostile take over style. That being said, I think that the major issue here will be the new seat at the Board of Overseers that QR will now have. Although a minority stakeholder, they will have some sway on how decisions are made, and if the Board works in any form like a coalition government, we could see QR sway other board members to play along with what QR wants.
Best,
The Millennial Traveler
U kinda neglected to mention QR CX already tried a partnership few years back, but the route was so unprofitable CX yanked HKG-DOH only after a short while
Who knows if this time is any diff ? Equity deal doesn’t imply JV so the math is still the same as the previous codeshare deal
Hello Mogando! Thanks for reading!
They did, at that point it was an over capacity issue, where the load factors were not as high as CX expected. The equity partnership will allow them more access to the airline’s books, and be able to give QR a seat at the board of directors, which means they will have direct say on corporate decisions.
Best,
The Millennial Traveler