Cathay Pacific to allocate half of A321neo order to budget carrier

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SYDNEY (Reuters) – Hong Kong’s Cathay Pacific Airways Ltd (HK:) said on Friday it would allocate half of its order for 32 Airbus SE (PA:) A321neos to its recently-acquired low-cost carrier HK Express as it looks to grow in the budget market.

The flagship Hong Kong airline has taken a financial battering from a fall in demand due to months of sometimes violent pro-democracy protests in the Asian financial capital, and last month lowered its full-year profit guidance.

Cathay plans to maintain its A321neo delivery schedule, with the first of the planes being delivered next year.

Regional arm Cathay Dragon, which had initially been poised to receive all 32 A321neos, will get 16 between 2020 and 2022, Cathay said in a statement, adding the following 16 will go to HK Express from 2022 onward.

Cathay in July completed the purchase of HK Express from cash-strapped Chinese conglomerate HNA Group , giving the premium carrier its first foothold in a rapidly growing budget travel market in Asia.

Rivals Singapore Airlines Ltd (SI:) and Australia’s Qantas Airways Ltd (AX:) have long had budget arms to help defend market share against low-cost carriers like AirAsia Group Bhd (KL:).

Cathay is also continuing to take new widebody planes at its parent airline, despite the current drop in passenger demand from protests. It reaffirmed it would receive 12 A350s and 21 777-9s by 2024.

“We will continue to invest in each of our airlines, their products and services,” Cathay Chief Executive Augustus Tang said in the statement on Friday.

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