Cathay Pacific announced a HK$39 billion capital reorganization plan. The Hong Kong SAR Government will acquire shares through Aviation 2020 Limited, a Hong Kong company wholly-owned by the Financial Secretary Incorporated. Cathay Pacific will issue preferred shares and warrants to the Hong Kong SAR Government, involving HK$19.5 billion and HK$1.95 billion, respectively. The Hong Kong Special Administrative Region Government also provided Cathay Pacific with HK$7.8 billion in interim loan financing.
In addition, Cathay Pacific will issue rights at a ratio of 7 shares per 11 shares, with a share price of HK$4.68 per share, involving approximately 2.503 billion rights shares and raising approximately HK$11.7 billion.
Since 2019, Cathay Pacific has experienced a series of challenges. The business development momentum in 2018 was good, driving good results in the first half of 2019. However, since mid-2019, the social situation in Hong Kong has caused a rapid decline in passenger demand, and the difficult operating environment has become more severe with the outbreak of the new coronary pneumonia epidemic.
Many industry analysts expect that the aviation industry's recovery will be gradual and long.
The International Air Transport Association (IATA) expects that international passenger transport demand will return to pre-epidemic levels as early as 2023. Compared to other international airlines, Cathay Pacific does not yet operate domestic routes and needs to rely entirely on cross-border tourism activities. Due to the current strict restrictions on cross-border tourism and the impact of isolation measures, international passenger transport is difficult to return to normal levels in the short term. Cathay Pacific said that after studying various feasible options, it believed that capital restructuring was needed to ensure sufficient liquidity to deal with the current crisis, including the global new coronary pneumonia epidemic and the dilemma in passenger traffic caused by travel restrictions around the world.
He Yili, Chairman of Cathay Pacific Group, expressed his gratitude to the Hong Kong Special Administrative Region Government for its financial support to enable Cathay Pacific to maintain operations and continue to contribute to Hong Kong’s international aviation hub. Cathay Pacific and Cathay Dragon provide world-leading quality services, and the newly acquired LCC Hong Kong Express also has considerable potential. The Guangdong-Hong Kong-Macao Greater Bay Area will become a driving force for world economic growth in the coming decades, and we are in an advantageous position in the area. Although the short-term challenges we face are enormous, our long-term prospects remain bright. (Headquarters reporter Zhou Weiqi)