The world's most richly valued major airline&xA0;is suddenly looking a little less shiny.

Ltd., whose 9.5 times enterprise value-to-Ebitda multiple is almost double that of . despite&xA0;a forecast HK$1.3 billion ($167 million) loss this year, is losing a key shareholder.

Affiliates of Ltd. sold their 9.6 percent&xA0;stake to&xA0; Airways Ltd. for HK$5.16 billion, according to a filing Monday. That's a large&xA0;change for an illiquid stock: Only 15 percent of Cathay's equity is freely traded, with Swire Group and Air Ltd. having 45 percent and 30 percent interests respectively. The shares that do trade fell as much as 4.9 percent in , headed for their worst performance in six months.

One obvious reason for the drop is that Cathay's valuation, and Kingboard's strategic stake, were both seen as bets not so much on the company's financial performance as the odds of Air China buying out Swire in a bid for complete control.&xA0;Such a deal would allow state-owned Air China&xA0;to create the world's largest cargo carrier&xA0;and build Cathay into a premium global brand, Corinne Png, an analyst at Crucial Perspective in Singapore, has argued. It would also fit a pattern of Beijing gradually tightening its control over Hong Kong, both politically and — with recent deals such as Cosco Shipping Corp.'s takeover of Orient Overseas&xA0;International Ltd. — in business terms.

Cathay shares have done rather well since Kingboard's affiliates first declared a holding last December, gaining 25 percent, of which 17 percent was in the past month alone. An airline stake never made a lot of sense for a maker of circuit-board laminates, but Kingboard's HK$800 million gain isn't to be sniffed at.

More tantalizing is the question of Qatar Airways' motivation. The carriers first struck a two-way relationship in 2014 with the announcement of twin daily flights between Hong Kong and Doha, although Qatar seems markedly more keen on the arrangement: When the congenitally aloof Cathay dropped its routes last year, the Gulf partner was so eager to keep up access into China that it matched the dropped flights on its own planes.

The&xA0;stake further extends&xA0;Qatar Chief Executive Officer 's&xA0;traction within the Oneworld alliance, where he now has influence with five of 13 members thanks to shares in IAG SA and Latam Airlines Group SA. 1 &xA0;It may also help consolidate Baker's presence in air : Cathay and Qatar are, respectively, the fourth- and fifth-biggest cargo carriers, with Emirates at No. 2.

Still,&xA0;to focus on those issues alone risks missing the wood for the trees. It's hard to miss the diplomatic ramifications as Qatar heads into its fifth month under blockade by neighboring countries, and as Saudi Arabia arrests senior figures in politics, business and royalty,&xA0;further consolidating Crown Prince Mohammad bin Salman's grip on power.

Qatar at present depends on emergency routes negotiated via&xA0;the UN's aviation organization ICAO to cross the air traffic control regions that surround the country and are entirely controlled by its rivals Saudi Arabia, Bahrain and the United Arab Emirates. A pivot to Asia makes sense in that context, since most destinations are accessible more or less directly through the friendlier skies of Iran.

More to the point, a seat around the table with Cathay's Chinese shareholders could buy Baker some powerful allies.&xA0;Qatar now has something Air China would badly like, in the form of an option on an outright takeover of Cathay Pacific. China, meanwhile, has an outbound tourism market that the UAE's Emirates (and at some point, even Saudi Arabia itself) might want to tap, not to mention a voracious demand for oil that's currently seeing the likes of Riyadh lose share to the Russians. If Doha's enemies push too hard, they risk antagonizing a very powerful ally.

A lesson known in every playground is that when you're being ganged up on, you need a friend who's stronger than your bullies. Qatar's state airline, in sidling up to China, may have done just that.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. The five are IAG-owned British Airways and Iberia, Latam Airlines, Cathay Pacific and Qatar Airways itself.

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