Cathay in talks to buy shares in Hong Kong Express

Cathay Pacific is in talks to buy shares in Hong Kong’s only budget airline from Chinese conglomerate HNA Group, as Asia’s biggest international carrier seeks to gain a foothold in the region’s booming low-cost travel market. Cathay is in “active discussions” about an acquisition involving Hong Kong Express Airways, the marquee carrier said Tuesday. There can be no certainty that any agreement will be entered into, Cathay said. The stake purchase would give Cathay a critical foothold in the market for budget-conscious travelers that’s eaten into demand for some of its routes as it undertakes a three-year transformation program. “This is part of a very big change in Cathay’s strategy,” said Steven Leung, executive director at UOB Kay Hian. “Competitors are developing budget airlines which have challenged its business. I think this deal will benefit the company in the long run.” A successful acquisition of Hong Kong Express would fill a hole in Cathay’s product offering, according to Rahul Kapoor and Chris Muckensturm, analysts at Bloomberg Intelligence. <br/>