Hong Kong government contributes to US$5 billion rescue package for Cathay Pacific

Cathay Pacific has confirmed the Hong Kong government will lead a recapitalisation plan worth US$5 billion to help stabilise the airline 

The airline was hit not only by COVID-19, but the political protests in Hong Kong before the pandemic.

Governments around the world have been bailing out airlines, including in Aotearoa where a special $900 million lifeline was handed to Air New Zealand.

The deal gives the Hong Kong government a 6 percent stake and allows it two observers on the company's board.

Major shareholder Swire Pacific's stake in Cathay will fall from 45 percent to 42 in the deal, while Air China's drops from 30 percent to 28.

The Hong Kong government does not intend to hold its stake in Cathay Pacific long-term, but acted when faced with the collapse of its biggest airline.

Political unrest in Hong Kong followed by the pandemic has meant Cathay Pacific has essentially been grounded, losing over US$350 million a month in passenger revenue.

Being based in Hong Kong, Cathay has no domestic market to rely on, leaving it very exposed to international travel disruption.

Cathay has furloughed some of its pilots based overseas and staff in the US and Canada since the start of the coronavirus pandemic.

Another offer of voluntary leave is about to be offered to staff, as well as larger cuts to the salaries of its executives.

Cathay Pacific chairman Patrick Healy said the government cash injection doesn't mean the airline can afford to relax - with public money involved, there's more at stake.

“It means that we must redouble our efforts to transform our business in order to become more competitive,” Healy said in a statement.

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