Qantas and China Eastern Airlines’ Hong Kong budget airline venture has sold a stake in their airline to a company founded by billionaire Stanley Ho, which will help pave the way for an operating license.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The low-cost carrier, called Jetstar Hong Kong, sold a 33.3 per cent stake to Shun Tak Holdings, Qantas said this morning. Qantas and China Eastern will hold 33.3 per cent each, according to the statement.
The total capitalisation of Jetstar Hong Kong remains unchanged at $US198 million ($188 million). With the addition of the partner, Qantas cut its initial planned equity investment to $US66 million from up to $US99 million. China Eastern and Shun Tak will also contribute up to $US66 million each, the statement said.
A local investor may help Jetstar Hong Kong win operating license from the local government. Failure to get the permit has delayed the venture’s operations, dampening Qantas chief executive Alan Joyce’s move to tap travel demand in China with a discount carrier.
According to the city’s basic law, the local government has the authority to issue licenses to airlines incorporated in Hong Kong and having principal place of business in the city.
Shun Tak’s biggest shareholders include firms owned by Ho’s daughters and himself. Its business range from property development, ferry services between Hong Kong and Macau, hotels and investment.
Jetstar Hong Kong will focus on flying to secondary Chinese cities, Qantas CEO Alan Joyce said in April. The airline will have about 18 aircraft, he said.
The first Hong Kong-based budget airline will offer 50 per cent lower airfares on average than those by full-service carriers, Jetstar Hong Kong CEO Edward Lau said in February.
The new venture targets its first flights by the end of this year with two Airbus SAS A320s, China Eastern vice chairman Ma Xulun said in March. Previously, the budget carrier aimed to start services as early as this month with three A320s.
No budget carrier has a hub at Hong Kong Airport. Hong Kong Express, an affiliate of Hong Kong Airlines, has said it will convert to a low-cost model. Oasis Hong Kong Airlines, which operated budget long-haul flights, collapsed in 2008 after racking up losses of about $HK1 billion ($120 million) in less than two years.
