Cathay Pacific Airways’ share price dipped by nearly 5% this morning (Hong Kong local time) following Qatar Airways’ move to acquire a 9.6% stake in the East Asian carrier.

Tremors were felt in early morning trading as Cathay’s share slipped to HK$12.56 (US$1.6) – a drop of -4.6% – after opening at HK$13.14 (US$1.68), but climbed to trade at approximately HK$13.00 (US$1.66) in the afternoon session (correct at the time of writing).

Qatar’s flag carrier had earlier announced an agreement to purchase 378,188,000 shares in Cathay Pacific Airways Limited, equivalent to approximately 9.6% of the total issued share capital, from Hong Kong-based Kingboard Chemical Holdings.

The average price per share is valued at HK$13.65 (US$1.7) with the transaction valued at HK$5.16bn ($US661m) according to a Hong Kong Stock Exchange filing. The transaction is expected to take place later in Hong Kong.

CHINA TRAFFIC BOOM

The deal means Qatar Airways will be Cathay Pacific’s third largest shareholder next to Swire Pacific Limited (45%) and Air China Limited (29.99%).

Qatar Airways Group Chief Executive, His Excellency Akar Al Baker said in a statement: “Qatar Airways is very pleased to complete its financial investment in Cathay Pacific.

“Cathay Pacific is a fellow oneworld member and is one of the strongest airlines in the world, respected throughout the industry and with massive potential for the future.”

A stake in Cathay will provide Qatar with leverage to tap into the fast-growing Chinese and Asian aviation market, with outbound Chinese tourist numbers increasing by 50% in the three years to 2017 and domestic tourists travelling within China reaching 705m during the Golden Week celebrations in October alone, according to research from the China National Tourism Administration and China Securities Journal.

In May, Cathay announced plans to cut around 600 jobs to ‘improve the speed and quality of decision-making and putting a greater focus on its customers’ as a response to increased competition from Asia’s low-cost carrier market.

However, the airline said at the time that it would continue to invest in its frontline capabilities to deliver ‘high-quality products and services to its customers’.