Hong Kong extends Cathay Pacific’s bailout loan for 12 months

posted on 8th June 2021 by Eddie Saunders
Hong Kong extends Cathay Pacific's bailout loan for 12 months

By Hannah Godfrey, cityam.com

The Hong Kong government has agree to extend the drawdown period for a HK$7.8 billion loan facility to Cathay Pacific Airways, giving it more flexibility to manage liquidity.

The bridge loan, which has been extended to June 2022, was part of a $5bn rescue package led by the Hong Kong government and Cathay’s major shareholders Swire Pacific and Air China last year to help the airline weather the Covid-19 crisis.

Cathay chief executive Augustus Tang said the airline had not yet drawn down on the loan as it adopted a suite of measures to save cash, but the extension would give it more flexibility to manage its liquidity position.

Cathay had HK$28 billion of liquidity as of December 2020 and also HK$6.74bn from a convertible bond issue in February and $650m in a bond issue last month.

The airline’s move to access as much liquidity as possible at a time when passenger numbers are down by more than 99 per cent from 2019 levels follows a decision by rival Singapore Airlines last month to issue S$6.2bn of convertible bonds.

The Singapore Airlines convertible bonds, underwritten by majority shareholder Temasek Holdings, were an optional part of a state investor-led S$15bn rescue package announced last year.

Both airlines lack domestic markets at a time when international borders are still largely shut.