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