HONG KONG - Hong Kong's airline Cathay Pacific has conditionally agreed to buy Hong Kong Express (HK Express), a local budget airline, for HK$4.93 billion ($628 million), Cathay Pacific announced on Wednesday.

"The transaction is expected to generate synergies as the business and business model of Cathay Pacific and HK Express are largely complementary," Cathay Pacific said.

Cathay Pacific said that the transaction will support its long-term development and growth of the aviation business and enhance its competitiveness.

After the transaction, Cathay Pacific intends to continue to operate HK Express as a standalone airline using the low-cost business model.

Upon completion of the transaction on or before Dec 31 this year, HK Express will become a wholly-owned subsidiary of Cathay Pacific.

After the transaction, three out of Hong Kong's four airlines will be controlled by Cathay Pacific.