Cathay Pacific gets $5bn in state-led bailout plan

A Cathay Pacific Boeing 777-300ER plane lands at Hong Kong airport. Picture: REUTERS/THOMAS PETERTroubled Hong Kong airline Cathay Pacific announced a HK$39bn government-led bailout plan on Tuesday as it battles a crippling downturn caused by the coronavirus.

On Tuesday the carrier announced a sweeping proposal to inject liquidity and keep it afloat with the help of Hong Kong's government, which will take a small stake in the firm. Under the proposal, Cathay will raise about HK$11.7bn in a rights issue on the basis of seven rights shares for every 11 existing shares held, while preference shares will be sold to the government for HK$19.5bn and warrants for HK$1.95bn, subject to adjustment.

Once the recapitalisation plan is complete, Aviation 2020 will take a 6x percent stake while Swire's shares will be reduced to 42% and Air China's to 28%.The South China Morning Post newspaper reported it was the first time Hong Kong's government had directly injected money into a private company. “The government will not take part in the company's daily operations,” he said, adding the two observer board members would not have any decision-making powers.

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