Qatar Airways investments equal almost 10 percent of Cathay Pacific ownership

Shares of Cathay Pacific Airways dropped almost 5 percent Monday as word got out that Qatar Airways had purchased a 9.61 percent stake in the Hong Kong flag carrier.

As a result of the deal, Qatar Airways has become Cathay Pacific's third largest shareholder.

The Middle Eastern carrier said it bought nearly 3.8 million Cathay shares, which represents a 9.6 per cent stake in Hong Kong's biggest airline. Cathay closed 1.5 per cent lower, while the broader Hong Kong market was flat.

Cathay did not put out a statement, but tweeted that the Swire Group and Air China continue to hold 74.9% of the airline.

Qatar Airways has been trying to compensate for this lost traffic and revenue by increasingly looking at global markets to expand its reach.

Qatar Airways bought the shares from Hong Kong's Kingboard Holdings, according to a stock exchange filing by the company, which makes circuit boards and invests in property.

Without having domestic flights as a way to underpin its earnings, carriers in Asia such as Singapore Airlines and Cathay has struggled against Middle East and Chinese rivals, as Cathay already has shed over 600 jobs over the last six months.

Since June, Qatar has been isolated by neighbouring countries including Saudi Arabia and the United Arab Emirates.

Cathay shares have risen by 29.4 per cent since the start of January despite the airline in August posting its worst first-half loss in 20 years.

Mr Will Horton, a Hong Kong-based senior analyst at CAPA Centre for Aviation, said that while Qatar Airways' investment in Cathay was likely to be passive, difficulties could arise if the two carriers tried to better integrate their hubs.

Qatar and Cathay Pacific have worked together previously on the Hong Kong-Doha route.

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