Has QR made a mistake in purchasing CX shares?

[Melburnian1]

With the news that Qatar Airways (QR) is about to purchase a 10 per cent stake in CX, has the former made a mistake?

James Hogan allegedly made a few blues at EY with his purchases turning out to (financially speaking) be duds. I include VA in that.

CX is experiencing hard times, with increased competition from mainland Chinese carriers. It may still be loss making.

While I don't have a strong view either way, because acquisitions often take time to show their worth, I'm interested to know what other AFFers think.

QR's poor record in the way it treats its staff may also not sit well with a company like CX, or many of its passengers who come from Hong Kong.

 

[ermen]

Haven't seen the numbers, but don't think CX is loss making on a cash basis (sure they have some stupid MTM on the fuel hedges contracts, but overall they are hardly bleeding cash).

 

[dajop]

James Hogan allegedly made a few blues at EY with his purchases turning out to (financially speaking) be duds. I include VA in that.

There are duds and there are duds. VA is probably not in the category of AB or AZ . Having said that Etihad investments have not been great ranging from dismal (AB/AZ/F7) to poor (VA, 9W) to at least being profitable (Air Serbia).

QR's poor record in the way it treats its staff may also not sit well with a company like CX, or many of its passengers who come from Hong Kong.

Long bow to draw with this one. Most passengers would not know that QR owns 10% of CX, and most who do know, probably would not be familiar with the way they treat their staff.

And if they did know, I'd suggest Hong Kong originating passengers (many who probably have their own helpers, employed at a very different standard to our western standards ... ) probably don't care anywhere near as much as say your typical BA or IB passenger, yet QR owns 10% of IAG without this specific issue affecting BA .

 

[docjames]

Suspect it's also about QR diversifying their interests out of the ME so a long term play.

 

[drron]

QR also have a 49% stake in Meridiana of Italy.Being renamed Air Italy.Can they get that one going.

 

[moa999]

Or into oneworld.

 

[Melburnian1]

Most passengers would not know that QR owns 10% of CX, and most who do know, probably would not be familiar with the way they treat their staff....

Fair point, although QR increased its stake in IAG (Iberia/ British Airways owner) to 20.01 per cent in 2016.

Interesting array of responses from AFFers. It would be good to know how much the Middle East difficulties with neighbours are costing QR, and what percentage of its costs (or revenue/ profit) this represents.

 

[codash1099]

Cathay & Qatar: Who wins?

 

[MEL_Traveller]

My concern is the potential influence QR might want to have over CX... particularly on the commercial side (and commercial considerations such as flight paths )