Cathay Pacific has entered a share purchase agreement to acquire budget airline Hong Kong Express Airways (HK Express) for HK$4.93bn ($628m).

The low-cost carrier is being purchased from China’s HNA Aviation Group and the deal price includes HK$2.25bn ($286m) in cash.

The transaction value also includes a non-cash consideration of HK$2.68bn ($341m), which will be paid through the issue of promissory loan notes.

“The transaction is expected to generate synergies as the businesses and business models of Cathay Pacific and HK Express are largely complementary.”

Cathay Pacific plans to operate HK Express as a standalone airline after the completion of the transaction, which is expected to take place on or before the end of this year. HK Express will become a wholly owned subsidiary of Cathay Pacific.

In a statement, Hong Kong’s flagship carrier Cathay Pacific said: “The transaction is expected to generate synergies as the businesses and business models of Cathay Pacific and HK Express are largely complementary.

“The transaction represents an attractive and practical way for the Cathay Pacific Group to support the long-term development and growth of its aviation business and to enhance its competitiveness.”

The acquisition is subject to satisfying certain conditions, including the necessary clearances from relevant competition authorities and other approvals.

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After completion of the acquisition, Cathay Pacific will own three of Hong Kong’s four passenger airlines. It currently controls all-cargo carrier AHK Air Hong Kong and Cathay Dragon.

Established in October 2013, HK Express operates a fleet of Airbus A320, A320-neo and A321 aircraft. It flies to destinations across China, South Korea, Japan and Vietnam.

Cathay Pacific Group serves more than 80 destinations across Asia, Europe, North America, the Pacific, the Middle East and Africa.

The company posted a full-year profit last year, ending two years of losses.