Stanley Ho’s Shun Tak Acquires Stake in Jetstar Hong Kong
By Jasmine Wang - Jun 6, 2013 10:21 AM ET
Qantas Airways Ltd. (QAN) and
China Eastern Airlines Corp. (670)’s
Hong Kong budget airline venture sold a stake in their airline to a company founded by billionaire
Stanley Ho, which will help pave the way for an operating license.
The low-cost carrier, called Jetstar Hong Kong, sold a 33.3 percent stake to
Shun Tak Holdings (242), Sydney-based Qantas said in a statement today. Qantas and
China Eastern will hold 33.3 percent each, according to the statement.
The total capitalization of Jetstar Hong Kong remains unchanged at $198 million. With the addition of the partner, Qantas group cut its initial planned equity investment to $66 million from up to $99 million. China Eastern and Shun Tak will also contribute up to $66 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, damping Qantas Chief Executive Officer 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.
Chinese Cities
Jetstar Hong Kong will focus on flying to secondary Chinese cities, Qantas Chief Executive Officer Alan Joyce said in April. The airline will have about 18 aircraft, he said.
The first Hong Kong-based budget airline will offer 50 percent lower airfares on average than those by full-service carriers, Jetstar Hong Kong Chief Executive Officer Edward Lau said in February.
The new venture targets its first flights by the end of this year with two
Airbus SAS (EAD) 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 Ltd., which operated budget long-haul flights, collapsed in 2008 after racking up losses of about HK$1 billion ($129 million) in less than two years.
To contact the reporter on this story: Jasmine Wang in Hong Kong at
[email protected]
To contact the editor responsible for this story: Anand Krishnamoorthy at
[email protected].