By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Travel Radar - Aviation NewsTravel Radar - Aviation News
  • Breaking News
  • Aviation
    • Aircraft
    • Airlines
    • Airshow & Events
    • Careers
    • Manufacturing
  • Travel
    • Airports
    • Points & Loyalty
    • Technology
    • Trip Reviews
  • Newsletters
Reading: Hong Kong Government to lead Cathay Pacific’s $5bn Relief Package
Share
Sign In
Notification Show More
Font ResizerAa
Font ResizerAa
Travel Radar - Aviation NewsTravel Radar - Aviation News
  • Breaking News
  • Aviation
    • Aircraft
    • Airlines
    • Airshow & Events
    • Careers
    • Manufacturing
  • Travel
    • Airports
    • Points & Loyalty
    • Technology
    • Trip Reviews
  • Newsletters
Signin Sign In
Follow US
Copyright © Travel Radar Media Ltd. 2025 | All Rights Reserved
Travel Radar - Aviation News > News > Hong Kong Government to lead Cathay Pacific’s $5bn Relief Package

Hong Kong Government to lead Cathay Pacific’s $5bn Relief Package

Travel Radar
Last updated: 9 June 2020 08:22
By Travel Radar Staff
4 Min Read
Share
Cathay Pacific A350
Cathay Pacific A350 ©Cathay Pacific
SHARE

In a dramatic turn of events, the stumbling Cathay Pacific just announced an enormous $5bn (HK$39bn) bailout package —in agreement with the Hong Kong government. Cathay has arranged the recapitalization financing plan to“maintain its competitiveness and operations.”

The plan comprises of three parts, all aimed at stabilizing the airline’s finances. The tranches are as follows:

  1. The Hong Kong government will be issued HK$19.5 billion in preference shares.
  2. Cathay will launch a HK$11.7 billion rights issue of shares to existing shareholders.
  3. The government will provide Cathay a HK$7.8 billion bridge loan facility.

Company officials also confirmed, in a press conference, (earlier reported by South China Morning Post) that the package will also install two government boardroom “observers.” These observers won’t have voting rights but will have a say in major decisions being made. They also clarified that Cathay is not treating this as a long-term loan and neither is the government.

Cathay’s Constant Financial Struggles

Cathay’s financial woes are no hidden matter. We reported earlier today that Cathay—along with stakeholders—had abandoned trading in the Hong Kong market.

The airline tried whatever it could to conserve cash but to no avail. In March, it even sold six of its over 50  Boeing 777 aircraft to realise cash. Chairman, Patrick Healy explained:

Despite all these measures, the collapse in passenger revenue to only around 1% of prior year levels has meant that we have been losing cash at a rate of approximately HK$2.5 billion to HK$3 billion per month since February, and the future remains highly uncertain.

It was hence left with the options to either seek external funding or expect an internal takeover. The former turned out to be the case.

Earlier, it was speculated that an Air China takeover would be imminent if the Swire group (Cathay’s largest stakeholder) sold its stake in the company. However, Cathay has successfully warded off these rumours and taken a ‘safe’ exit; keeping in mind the current political climate.

Will Cathay Survive?

Cathay, after receiving massive the $5bn state-injection, will join ranks with some major international carriers like Lufthansa that have collected substantial aid from their respective governments.

The all-important question, however, is that will it survive? Healy had an interesting comment which could shed some light on the answer:

The infusion of new capital that we have announced today does not mean we can relax. Indeed quite the opposite. It means that we must redouble our efforts to transform our business in order to become more competitive.

He added:

Tough decisions will need to be made in the fourth quarter of this year to get Cathay Pacific to the right size and shape in which to compete successfully and thrive in this new environment. But once we have right-sized the airlines to adapt to our new reality, our long-term prospects remain as bright as ever…

The government lifeline will indeed help Cathay to steer clear of immediate loss. But the journey of complete recovery will be a long and tiresome one. It could easily take till 2023 for any signs of recovery (if any at all) to appear.

Cathay also recognises this new reality it finds itself in.

What do you think of the Cathay’s plans? Let us know in the comment!

You Might Also Like

Tourism Seychelles Host Successful Media Workshop In Seoul
Tragic Jeju Air Crash Claims 179 Lives in South Korea
Australia’s Best Budget Flights In June 2021
Indian Airlines Prepare to Start Ticket Sales Again
Global Warming may CLOSE Greenland’s Airport
Share This Article
Facebook Twitter Email Copy Link
What’s your thoughts?
Love0
Sad0
Happy1
Angry0
Travel Radar
ByTravel Radar Staff
Follow:
Articles from guest contributors wishing to remain anonymous are credited to this account. Want to contribute to Travel Radar either in-name, or anonymously? Get in touch: [email protected]
Previous Article British Airways Threatening Dismissal of Pilots
Next Article Airbus Threatens To Sue Airlines Over Undelivered Aircraft
Subscribe
Login
Notify of
guest
guest
0 Comments
Oldest
Newest Upvoted
Inline Feedbacks
View all comments

Stay Connected

FacebookLike
TwitterFollow
InstagramFollow
YoutubeSubscribe

Trending News

Aer Lingus launches their largest ever transatlantic schedule with expansion of their long-haul network and a new direct service to Dublin from North Carolina in 2026.
Aer Lingus Launches ‘Largest Ever’ Transatlantic Schedule for 2026
Airlines Aviation Route Development
Boeing 777
APEX 2026 Awards: Another Win for Air Canada
Airshow & Events Aviation
A group of five individuals in business attire stand together in a corporate setting, holding a certificate. The background features the Boeing logo prominently displayed on a screen. Two nameplates are visible on the table in front of them, reading "Crystal Remfert - Boeing Global Services" and "Chan Woo Jung - Korean Air." A floral arrangement is also present on the table.
Korean Air and Boeing Forge Strategic Alliance to Advance Predictive Maintenance
Airlines Aviation Technology
A close-up image shows a person holding a credit card near a payment terminal, ready to make a contactless payment. The card is gold-colored with the name "Chris Muller" visible on it. Another hand is holding the payment terminal. In the background, there are blurred figures of people sitting at a table with cups and glasses.
Lufthansa Miles & More Credit Card Relaunches with Deutsche Bank and Expanded Benefits
Airline Economics Aviation Points & Loyalty
Attendees at the signing of the Memorandum of Understanding Between Cathay and Hong Kong Disneyland Resort at Hong Kong Disneyland Hotel
Cathay and Hong Kong Disneyland Join Forces to Boost Tourism
Airlines Aviation
//

Travel Radar is the leading digital hub for all things aviation and air-travel. Discover our latest aviation news, aviation data, insight and analysis.

Discover

  • Latest News
  • Subscribe
  • Weekly Digest
  • Contact Us
  • Privacy Policy
  • About Us
  • Advertising
  • Media Coverage
  • Press & Events
  • Join Our Team
  • Our Brands

Signup to our Newsletter!

And get the latest aviation news via our weekly news digest!

© Travel Radar Media Ltd. 2015-2025 | ISSN #2635-0696 | Trademark #UK00003579704
wpDiscuz
adbanner
Welcome to the TR Community!

Sign in to your account

Not a member? Sign Up