Cathay Pacific given extension to draw down HK$7.8b government loan

[HONG KONG] Cathay Pacific Airways said on Tuesday that the Hong Kong government had agreed to extend the drawdown period for a HK$7.8 billion (S$1.34 billion) loan facility by a year to June 2022, giving it more flexibility to manage liquidity.

The bridge loan was part of a US$5 billion 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 in a statement 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 raised HK$6.74 billion from a convertible bond issue in February and $650 million 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$6.2 billion of convertible bonds.

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

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

REUTERS