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Cathay Pacific will buy low-cost carrier Hong Kong Express for $4.93bn Hong Kong dollars ($628m).
The purchase will be made in cash and through promissory loan notes, the company said in a stock filing.
Hong Kong Express, which flies to destinations across Asia, will become a wholly-owned subsidiary of Cathay Pacific.
The transaction is expected to be completed by the end of the year.
“We intend to continue to operate Hong Kong Express as a stand-alone airline using the low-cost carrier business model,” a Cathay Pacific spokesperson said in a statement.
Cathay Pacific had a challenging 2018 after posting its first ever back-to-back annual loss in March last year.
It was the subject of a data breach in its IT systems in October, jeopardising the personal information of up to 9.4 million passengers.
The airline has struggled against competition, particularly from low-cost Chinese carriers covering Hong Kong, mainland China and South East Asia.
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