Cathay Pacific recapitalisation

One of the airlines earliest and hardest hit by the coronavirus pandemic, Cathay Pacific Airways, is to be recapitalised.

Together with KLM it is probably the only major air carrier not to have a domestic subsidiary due to geography, although Virgin Atlantic is similarly placed, out of choice.

Cathay has seen a sharp decline in passenger traffic since mid-2019 due to social unrest in Hong Kong followed by the outbreak of the Covid-19 pandemic.

The three-part plan, financed by the Government of Hong Kong, is designed to provide Cathay with sufficient funds to withstand the industry-wide downturn, as well as a stable platform from which it will be able to conduct a wholesale review of operations.  It comprises three tranches.

Initially Cathay will issue HK$19.5bn in preference shares with detachable warrants to the Hong Kong Government after requisite shareholders’ approval has been obtained.

The second will see the carrier launch a HK$11.7bn rights issue to existing shareholders, while the third will see the Hong Kong government provide a HK$7.8bn bridge loan facility.

Cathay Chairman, Patrick Healy, said: “We are grateful to the Hong Kong Government’s capital support, which allows Cathay Pacific to maintain our operations and continue to contribute to Hong Kong’s international aviation hub status.”

Cathay is seen as the flagship for Hong Kong.  This support by the Government will be seen as an effort by the former crown colony that is business as usual in spite of any shadows cast by mainland China.

www.btnews.co.uk

www.cathaypacific.com

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