Cathay and parent company Soar Pacific on Tuesday announced plans to raise HK 39 39 billion (5 5 billion) in the new capital to help the airline survive the crisis caused by the coronavirus epidemic.
The Hong Kong government will provide the bulk of the new funding by increasing the HK 27 27.3 billion ($ 6.3 billion) bailout package, combining funds and the purchase of preferred shares. The rest of the capital will come from the issuance of new stock.
The deal is that the Congolese government-owned limited company Aviation 2020 will leave, with Cathay having a %% stake. City Finance Secretary Paul Chan told reporters the government would also appoint two observers to the Cathay Board to protect investment.
Patrick Haley, chairman of Cathay, told reporters on Tuesday that the airline was grateful for the government’s “capital assistance”, which continues to help Cathay Pacific conduct its operations and contribute to the status of Hong Kong’s international aviation center.
“Without this plan the alternative could have been the collapse of the company,” he said.
Business and vacation travel have stopped since coming and going from Asian financial centers elsewhere. Haley said Tuesday that Cath’s passenger earnings are down about 1% from the normal level. Career executive pay, reduced employee salaries, and working with 3% power to save cash. It announced on Tuesday that it would cut executive pay by 30%.
Cathy has been burning about HK প্রায় 3 billion (৮ 387 million) a month since February of this year, drawing দ্রুত 20 billion (২ 2.6 billion) in cash at the beginning of the year.
The airline is now re-evaluating all aspects of its business model and “this will certainly involve more rationalization of future planning capabilities than our pre-crisis pre-planning,” Haley said.
Kathy said it was unlikely to return to the same number of flights it was running any time soon before the epidemic.
“Hong Kong is a city better than the United States or China, when our international flights don’t run, Hong Kong will stop,” he said. Chan told reporters.
Both Kathy and Hong Kong officials said the government does not intend to be a partner in the long run.
The opportunity to pay dividends for government-preferred shares has been created to encourage people to pay and redeem shares on an early basis, Healy said..
The government has provided সহায়তা 123 billion in financial aid to airlines around the world, the International Airport Transport Association said in a report in May. Most of the assistance includes loans, loan guarantees and pending fees that have to be paid, the aviation group said.