380Flyer

A little birdie tells me that Hong Kong Airl8nes and HK Express are up for sale and that Temasek Holdings from Singapore are about to start a due diligence process for the airline:

andersonCooper

to avoid antitrust lawsuit?

cxfan1960

+1

sxc

andersonCooper

"The Company remains the subject of antitrust proceedings in various jurisdictions. Except as otherwise noted
below, the proceedings are focused on issues relating to pricing and competition. The Company is represented by
legal counsel in connection with these matters.
The proceedings and civil actions, except as otherwise stated below, are ongoing and the outcomes are subject to
uncertainties. The Company is not in a position to assess the full potential liabilities but makes provisions based on
facts and circumstances in line with accounting policy 20 on page 109.
In November 2010, the European Commission issued a decision in its airfreight investigation finding that, amongst
other things, the Company and a number of other international cargo carriers agreed to cargo surcharge levels and
that such agreements infringed European competition law. The European Commission imposed a fine of Euros
57.12 million on the Company. However, the General Court delivered judgment in December 2015 annulling the
European Commission’s finding against the Company and the fine of Euros 57.12 million was refunded to the
Company in February 2016. The European Commission has informed the Company and the other airlines involved in
the case of its intention to issue a new decision.
The Company is a defendant in a number of civil claims, including class litigation and third party contribution claims,
in a number of countries including Canada, the United Kingdom, Germany, the Netherlands, Norway and Korea
alleging violations of applicable competition laws arising from the Company’s alleged conduct relating to its air
cargo operations. In addition, civil class action claims have been filed in Canada alleging violations of applicable
competition laws arising from the Company’s alleged conduct relating to certain of its passenger operations. The
Company is represented by legal counsel and is defending these actions, except as noted below.
The Company was involved in three putative class action cases filed in Canada, in which the plaintiffs alleged the
Company and other carriers that provide air cargo services fixed the prices of various air cargo charges and
surcharges in violation of the Canadian Competition Act. The Company reached an agreement to settle all three
actions in December 2015, by paying the plaintiffs CAD$6 million (approximately HK$34.9 million at the exchange
rate current at date of payment). The settlements, which were approved by the Courts in Ontario and British
Columbia in July 2016 and the Courts in Quebec in August 2016, will resolve claims by all putative class members in
all three actions."

KUL1971

I think it is unlikely for Temasik to have a controlling stake.

Jetstar HK was rejected at first as it was deemed to have foreign majority with QF/MU being partners in JQ HK. Later, despite Pansy Ho being brought in as a significant shareholder and the airline was deemed to be majority owned by Hong Kong resident, the AOC was ultimately denied by CAD.

HNA is desparate for cash and may offload a minority stake in their HK outfit.

Question is, will CAD(defacto CX) block the deal if Temasik wants a controlling stake. It is not in HNAs interest to sell to Cathay as CX/KA will compete with HNA in China

hkskyline

Are there even financials available for either airline? Don't think I've ever seen whether they are profitable or not.

cxfan1960

If there is a friendly acquisition, the acquirer will do a full DD, which includes not just income statements & balance sheets, but also liability, contractual obligations, litigation, human resources items, IT, etc. However, my feeling is such a merger may not be able to get approvals from all jurisdictions. I doubt if CX will even plan to do that.

garykung

I believe you should say why CA (Air China) or Li's family is not looking into this.

FWIW - Swire is not as powerful as it used to be. I don't really believe Swire can raise enough cash to do it.

Nicc HK

A quick look at recent HNA Group news shows them unloading assets globally. These are primarily Hotels and Property. Also HNA have settled their China Fuel Bill, mainland banks are lending again and HNA has been shortlisted for Plovdiv Airport concession. However trading is still suspended.

Given the opaqueness of the accounts it looks like HNA's real problems are short to medium term cash flow driven by the very large debt. Not a particularly astute observation, this is common knowledge. However more information on the loan/debt maturity ratios would reveal more. The higher the short term outstandings relative to long term debt the bigger the structural cash problems and systemic re-occurance. A good example of this on a soveriegn scale is Greece.

Regarding Cathay Pacific, they have over the years managed to swallow up Hong Kong Airways (Owned by Jardines), Air Hong Kong and Dragonair. I would not be surprised if the HK Government did not block any theoretical takeover by CX. That is if CX actually has the appetite, or perhaps in a joint bid with Air China.

On reflection it would get more interesting if China Eastern (after their proposed jv with Qantas and investment ties to Delta) or China Southern started sniffing around.

Happy Easter!

Nicc

kaka

Kachjc

makes sense for CX to buy

you need to have at least 50% of your hub slots if you want to profitable long term

CX had that and then lost it in the last 3 years

here is a chance to get it back.

I do not see why it would be blocked....

CX pours more money into the HK economy than any other airlines anyway

garykung

Actually, Victor was successful in bidding AC. The problem was uncertainty with AC forced Victor to back out.

bart simpson

If CX really buys shares of HX, I guess we can all start to say goodbye to cheap ex-HKG tickets.

marcommm

That is one big reason CX should do so, isn't it