Hong Kong govt to lead $5b rescue package for Cathay Pacific

A man walks past a Cathay Pacific Airways Ltd. logo at Hong Kong International Airport in Hong Kong, China, on Tuesday, Jan. 17, 2017. Cathay, Asia’s biggest international airline, plans to shorten its fuel-hedging program and revamp its workforce as part of a new business strategy to halt a slide in earnings. Photographer: Anthony Kwan/Bloomberg

Cathay Pacific Airways Ltd announced on Tuesday a recapitalisation plan worth HK$39 billion ($5.03 billion) led by the Hong Kong government to help it weather the coronavirus pandemic.

The government will be issued HK$19.5 billion of preference shares giving it a 6% stake, HK$1.95 billion of warrants and will provide a HK$7.8 billion bridging loan, Cathay said. The government will also have the right to two observers at board meetings.

Governments around the world have been helping to aid airlines amid a plunge in travel demand, and in some cases such as Germany’s Lufthansa, they are taking direct equity stakes.

The Cathay pact includes a HK$11.7 billion rights issue to existing shareholders, led by Swire Pacific Ltd and Air China Ltd, which had halted trading on Tuesday morning alongside Cathay, pending the announcement.

Swire, which holds 45%, Air China which owns 30% and Qatar Airways with 10% plan to participate in the rights issue, Cathay said. Their holdings will fall to 42%, 28% and 9.4% afterward.

Cathay has grounded most of its planes because of falling demand amid coronavirus-related travel curbs, flying only cargo and a skeleton passenger network to major destinations such as Beijing, Los Angeles, Singapore, Sydney, Tokyo and Vancouver.

Cathay said on Tuesday a fall in passenger revenue to only 1% of the previous year’s levels meant the airline had been losing cash at a rate of HK$2.5 billion to HK$3 billion per month since February.

Cathay has furloughed some pilots at overseas bases and cut cabin crew roles in the United States and Canada since the start of the coronavirus pandemic, but has not announced large-scale permanent job losses.

The airline said on Tuesday it would put in place a further round of executive pay cuts and a second voluntary leave scheme for employees alongside the recapitalisation proposal.

“In the longer term, all aspects of the Cathay Pacific Group’s business model will be re-evaluated,” the airline said.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.