Hong Kong flag carrier Cathay Pacific announced Wednesday that it will buy budget airline HK Express for US$628.15 mn, as it moves to counter competition from the increasing number of low-cost carriers in the region.
The HK$4.93 bn acquisition leaves Cathay Pacific in control of three of the four airlines in Hong Kong, adding to its namesake carrier and regional subsidiary Cathay Dragon.
Hong Kong Express is the city's sole budget carrier - a sector of the industry that a marquee brand like Cathay has struggled to compete against.
Hong Kong Express is owned by HNA Group, a struggling Chinese conglomerate that has been looking to lower its debt pile. The group also owns Hong Kong Airlines, another Cathay competitor that has found itself in financial difficulties in recent months.
Cathay has been overhauling its business after posting its first losses for eight years in 2016, firing more than 600 workers and paring overseas offices and crew stations as it faces stiff competition from budget rivals in China.
It has also added international routes and better on-board services
The overhaul appears to have paid off. Earlier this month Cathay Pacific announced a net profit of HK$2.35 billion ($299 million) last year, ending two successive annual losses.