It was a marriage made in the rarified atmosphere of 30,000 feet. On Wednesday, Hong Kong flag carrier Cathay Pacific announced it would buy budget airline HK Express for US$628.15 million.

The decision was made to counter competition from the increasing number of low-cost carriers in the region.

The HK$4.93 billion acquisition leaves Cathay in control of three of the four airlines in Hong Kong, adding to its namesake carrier and regional subsidiary Cathay Dragon.

As for the details of the deal, Cathay will pay HK$2.25 billion in cash for HKE, and issue HK$2.68 billion in promissory loan notes, the company said in an official filing to the Hong Kong Stock Exchange.

The takeover should be completed by December, according to the filing.

“The transaction is expected to generate synergies as the businesses and business models of Cathay Pacific and HKE are largely complementary,” Cathay said in the filing.

Cathay shares rose 2.78% to HK$14.06 in Hong Kong trading shortly after the market opened.

HKE is the city’s sole budget carrier – a sector of the industry that a marquee brand like Cathay has struggled to compete against.

Still, what is interesting is that the budget airline was owned by the HNA Group, a struggling Chinese conglomerate that has been looking to lower its mountain of debt.

The company also owns Hong Kong Airlines, another Cathay competitor that has found itself in financial difficulties.

During the past 18 months, Cathay has been overhauling its business after posting its first losses for eight years in 2016.

Part of the restructure included firing more than 600 workers and paring overseas offices and crew stations as it faces stiff competition from mainland Chinese carriers.

Earlier this month, Cathay announced a net profit of HK$2.35 billion ($299 million) for 2018, ending two successive annual losses.

– reporting from AFP