Hong Kong government will lead around HK$30 billion ($3.9 billion) bailout package for Cathay Pacific Airways Ltd giving it two observer seats within the boardroom, the South China Morning Post reported today, citing sources.
The deal includes a government loan and equity stake, the newspaper said, adding it absolutely was a part of a broader HK$40 billion capital restructuring exercise for the airline to assist it weather the coronavirus pandemic.
Cathay and major shareholders Swire Pacific Ltd and Air China Ltd stopped trading on Tuesday morning pending a declaration. Swire owns a forty five stake in Cathay and Air China owns 30%.
Cathay has grounded most of its planes due to the falling demand amid coronavirus-related travel curbs, flying only cargo and a skeleton passenger network to major destinations like Beijing, l. a. , Singapore, Sydney, Tokyo and Vancouver.
The company in May, 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 777-300ER jets and associated equipment for $703.8 million to BOC Aviation Ltd, which Morningstar analyst Ivan Su said would cover quite half its projected cash outflow in 2020.
Cathay has furloughed some pilots at overseas bases and cut cabin crew roles within the u. s. and Canada since the beginning of the coronavirus pandemic, but has not declared large-scale permanent job losses.