Cathay and parent company Swire Pacific have announced plans to raise $ 39 billion in Hong Kong ($ 5 billion) in a new capital on Tuesday to help the airline survive the crisis caused by the Korano pandemic.
The Hong Kong government will provide most of the new funds to expand a $ 27.3 billion Hong Kong bailout package ($ 3.5 billion) consisting of loans and preferred stock markets. The rest of the capital will come from the issuance of new stocks.
The deal would leave Aviation 2020, a Hong Kong government-owned company, with about 6% stake in Cathay.
The airline is “grateful” for the government’s “capital support”, which allows Cathay Pacific to maintain our business and continue to contribute to Hong Kong’s international airline status, “said Patrick Healy, President. of Cathay.
As elsewhere, travel for business and vacation to and from the Asian financial hub has stopped. Healy said on Tuesday that Cathay’s passenger revenue had fallen to about 1% of normal levels. The carrier has reduced executive fees, hired staff and operated with a capacity of 3% to maintain cash.
Cathay said it was unlikely he would return to the same number of flights as before the pandemic.
The airline is reconsidering all aspects of its business model and “inevitably this will include streamlining our future planned capacity compared to our pre-crisis plans,” Healy said.
The Hong Kong government does not want to keep its stake in Cathay in the long run, Hong Kong’s fiscal secretary Paul Chan said on Tuesday.
Governments have pledged $ 123 billion in financial aid to airlines around the world, the International Air Transport Association said in May. The majority of the aid consists of loans, loan guarantees and deferred taxes to be repaid, the airline group said.