The deal is expected to be completed on or before Dec 31, 2019.
Cathay has agreed to pay HK$2.25 billion (US$287 million) in cash for the acquisition. The flag carrier has also pledged to repay HK$2.68 billion (US$341 million) of debt by Hong Kong Express in the form of promissory notes.
The carrier said HK Express would continue to operate as a standalone airline using the low-cost business model.
HK Express flies 24 aircraft to 27 cities, carrying 4.1 million customers. The majority of the low-cost airline’s flights are to Japan and South Korea, which are popular destinations among travelers from Hong Kong
If the deal goes through, Cathay Pacific would control three of Hong Kong’s four passenger airlines.
Cathay currently owns Cathay Dragon and an all-cargo carrier named AHK Air Hong Kong
Cathay has faced enormous competition form budget airlines in recent years such as AirAsia and carriers like Singapore Airlines and Qantas that’ve already played in the low-cost market.
As a result, Cathay recorded losses in both 2016 and 2017. The carrier inched back into black in 2018 with HK$2.3 billion ( US$293 million) of net profit for the year.