Cathay Pacific and its primary shareholders, Swire Pacific Ltd and Air China Ltd have suspended trading shares in Hong Kong. The decision, that still awaits announcement, comes as a massive blow to the Hong Kong based airline.
According to Reuters:
Cathay’s management team on Friday met with the leaders of pilot unions at Cathay Pacific and its regional arm Cathay Dragon to brief them on condition of confidentiality ahead of an announcement expected on Tuesday
Cathay had been struggling ever since the pandemic arrived. Just last month it reported a gigantic unaudited loss of $580.64mn.
Swire Pacific is Cathay Pacific’s largest shareholder holding a 45% stake, followed by Air China that owns 30%.
As of now, Cathay Pacific continues to fly minimal passenger flights alongside cargo operations.
So what is next for Cathay? Well in a desperate attempt to raise funds, it may resort to a rights issue following in the footsteps of Singapore Airlines, as were reported yesterday. According to Bloomberg:
Cathay could be planning to raise funds via a rights issue backed by Swire and Air China, said Justin Tang, head of Asia research at United First Partners.
Will it sustain this hit or will a new owner emerge, with one major stakeholder selling their stake in the struggling airline. It will be interesting to see how Hong Kong’s national flag carrier emerges from this major announcement.
Travel Radar will continue to monitor events and issue a detailed update.