Cathay Pacific confirms talks to buy Hong Kong Express from HNA

Cathay Pacific Airways on Tuesday confirmed it is negotiating to acquire budget carrier Hong Kong Express Airways from troubled Chinese conglomerate HNA Group.

The major Hong Kong-listed airline acknowledged news reports regarding the talks — a story broken by Bloomberg last month. Cathay said it “is in active discussions about an acquisition involving HKE.”

The acquisition hunt comes as Cathay prepares to post its first profit in three years for last year. Its preliminary estimate put profit attributable to shareholders at 2.3 billion Hong Kong dollars ($293 million).

This is not the first time Cathay has sought to snap up homegrown rivals. Past purchases have included Dragon Air and Air Hong Kong. Now, it is also reportedly looking to buy full-service carrier Hong Kong Airlines from HNA, although the company did not confirm this on Tuesday.

Cathay is seeking new revenue sources after going through a rough patch in recent years. It faces tougher competition over flights to and from Hong Kong, as other international airlines swoop in to attract wealthy Chinese passengers.

The premium Hong Kong carrier also lacks a strong position in the domestic Chinese market. The airline is not allowed to serve Chinese provincial cities directly from locations other than Hong Kong.

Cathay announced a three-year turnaround plan in 2017, including a payroll cut.

Source: Civil Aviation Authority