HONG KONG (June 9): Hong Kong’s government will lead a near HK$30 billion ($5.4 billion) bailout package for Cathay Pacific Airways Ltd giving it two observer seats in the boardroom, the South China Morning Post reported on Tuesday, citing sources.
The deal includes a government loan and equity stake, the newspaper said, adding it was part of a broader HK$40 billion capital restructuring exercise for the airline to help it weather the coronavirus pandemic.
Cathay and major shareholders Swire Pacific Ltd and Air China Ltd halted trading on Tuesday morning pending an announcement. Swire owns a 45% stake in Cathay and Air China owns 30%.
Cathay has grounded most of its planes because of falling demand amid coronavirus-related travel curbs, flying only cargo and a skeleton passenger network to major destinations such as Beijing, Los Angeles, Singapore, Sydney, Tokyo and Vancouver.
The company last month said it had made an unaudited loss of HK$4.5 billion at its full-service airlines Cathay and Dragon over January-April and flagged a “very bleak” outlook.
Cathay in March sold six Boeing (BA.N) 777-300ER jets and associated equipment for $703.8 million to BOC Aviation Ltd, which Morningstar analyst Ivan Su said would cover more than half its projected cash outflow in 2020.
Cathay has furloughed some pilots at overseas bases and cut cabin crew roles in the United States and Canada since the start of the coronavirus pandemic, but has not announced large-scale permanent job losses.
