HONG KONG, June 9 (Xinhua) -- China's Hong Kong Special Administrative Region (HKSAR) government will invest 27.3 billion Hong Kong dollars (around 3.52 billion U.S. dollars) to Hong Kong's flagship airline Cathay Pacific in a bid to help the group tide over its operational and financial difficulties and to uphold Hong Kong's status as an international aviation hub, HKSAR government Financial Secretary Paul Chan said on Tuesday.
Under the investment scheme, the HKSAR government will buy Cathay's preference shares worth 19.5 billion Hong Kong dollars (2.52 billion U.S. dollars), and lend around 7.8 billion Hong Kong dollars (1 billion U.S. dollars) to the group, Chan told the media.
The COVID-19 pandemic has hard hit the operating environment of aviation industry worldwide, leading to a near-halt in both passenger flights and cargo business, Chan said. And Cathay Pacific, which Chan described as "Hong Kong's most important local airline and the key driver of Hong Kong's aviation development", is also facing unprecedented operational and financial pressure.
Chan stressed that Hong Kong is a world class international aviation hub, and the aviation industry plays a strategic role in the economic development of the region.
"Our comprehensive international air network not only facilitates the flow of passengers and cargoes through Hong Kong, but also underpins the development of a wide spectrum of economic activities, notably trading and logistic, financial services, and tourism, etc," he said, adding that the HKSAR government is determined to reinforce the city's international aviation hub status.
To safeguard the best interests of the HKSAR government, Chan said the government will appoint two observers to Cathay's board of directors until the group redeems all preference shares from the government, and repays the government in full the bridging loan related interests.
Cathay Pacific Tuesday released a recapitalization plan worth 39 billion Hong Kong dollars (5.03 billion U.S. dollars) to help it maintain competitiveness and operation, showing that apart from the government investment, the group will also raise 11.7 billion Hong Kong dollars (1.51 billion U.S. dollars) from existing shareholders in a rights issue.
Cathay's two largest shareholders, Swire Pacific and Air China, both said they will subscribe the rights shares allotted to them.
Cathay Pacific Chairman Patrick Healy expressed the group's gratitude to the HKSAR government's capital support, which allows Cathay to maintain its operations and continue to contribute to Hong Kong's international aviation hub status, as well as its shareholders for their confidence in the long-term future of Cathay Pacific and in the ability of its management team to lead it through what is the most challenging period in its history.
Born in 1946, Cathay Pacific and its subordinate airlines Cathay Dragon and the budget airline HK Express provide passenger and freight services connecting Hong Kong and the world.
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