Cathay Pacific given extra year to tap $1bn gov’t loan

Hong Kong’s government has agreed to give Cathay Pacific (CX, Hong Kong Int’l) an extension on the drawdown period for a HKD7.8 billion Hong Kong dollar (USD1 billion) rescue loan facility by another year to June 2022, providing “more flexibility to manage our liquidity position,” the airline announced in a statement on June 8. The bridge loan was part of a HKD39 billion (USD5 billion) recapitalisation package handed to the airline in June 2020, emanating from the government as well as from major shareholders Swire Group and Air China (CA, Beijing Capital), to help the embattled carrier withstand the Covid-19 crisis. The package also included a HKD11.7 billion (USD1.5 billion) rights issue to shareholders and the government subscribing to HKD19.5 billion (USD2.5 billion) worth of its preference shares. Posting a HKD21.6 billion (USD2.8 billion) net loss for 2020, Cathay had HKD28 billion (USD3.6 billion) in liquidity at the end of the year. It later raised HKD6.74 billion (USD870 million) from a bond issue in February and USD650 million in another bond issue in May. “We have not drawn down the facility over the past 12 months as we have been adopting a suite of measures to preserve cash,” Cathay Pacific CEO Augustus Tang explained in the statement. But Hong Kong’s flagship carrier has said it expects uncertainty to continue during 2021, with the pace of recovery in passenger traffic remaining slow. “As we look to the future, it is critically important that we continue to remain agile, focus on prudent cash management, and explore capital financing opportunities as they arise. As travel demand gradually resumes, we remain absolutely confident in the long-term future of Cathay Pacific and Hong Kong Int’l as an international aviation hub,” Tang added. In related news, Cathay Pacific has confirmed it will close its pilot base in Australia, telling employees there via email to choose between redundancy and relocating to Hong Kong, The Australian reported. Reports emerged in April, when it closed its base in Canada, that it was considering a similar shutdown in Australia. The broadsheet reported that more than 40 of the affected staff are based at Melbourne Tullamarine, 27 at Sydney Kingsford Smith, 26 at Brisbane Int’l, 15 at Perth Int’l, and nine in Adelaide. Deborah McConnochie, head of employee relations and communications, apologised in the emails for “not being able to find an alternative,” adding: “This is not a decision we have made lightly and is not a reflection on the performance of our Australian-based pilots. We will now do all we can to support you through this process.”