Cathay Pacific secures USD5 billion government bailout
Under pressure national flag carrier Cathay Pacific has bagged a HK$39 billion ($5 billion) lifeline from the Hong Kong government.
As a result Hong Kong’s government will take a minority stake and have a presence on Cathay’s board.
"Quite frankly, without this plan the alternative would have been a collapse of the company," said Cathay chairman Patrick Healy.
The capital injection comes from new shares issued to the government owned entity Aviation 2020 and the government has given a HK$7.8 billion bridginng loan.
Aviation 2020 will take a 6% stake, slightly diluting the stakes of major shareholders Swire and Air China.
It will also be allowed to send two ‘observers’ to attend board meetings, but without voting rights.
"We expect the investment to last three or more years as we at least need to wait for the pandemic to pass. The government will not take part in the company’s daily operations," said finance secretary Paul Chan.
Cathay had been under pressure long before the global Covid-19 pandemic after six months of relentless pro-democracy protests rocked Hong Kong, causing tourism and business travel to plunge.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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