The Cathay Pacific Group announced today a proposed HK$39 billion (US$5 billion) recapitalisation that involved the Hong Kong government taking an ownership stake in the airline group and providing a bridging loan as well as a rights issue that major shareholders have pledged to support.Read More » The company said in a regulatory filing to the Stock Exchange of Hong Kong the recapitalisation was in response to a series of unexpected events including COVID-19 and would ensure it had sufficient liquidity to weather the current crisis.
Under the proposed recapitalisation, which required the approval of shareholders at an extraordinary general meeting (EGM) set for July 13, the Cathay Pacific Group would raise HK$19.5 billion through the issuing of preference shares and HK$1.95 billion (subject to adjustments) through warrants to subscribe for shares to Aviation 2020 Ltd, which was wholly owned by Hong Kong's Financial Secretary Incorporated. Aviation 2020 Ltd also would provide a HK$7.8 billion bridging loan facility. The government backed entity would emerge with a 6.08% holding in Cathay Pacific and two "observer" positions on the board.
For the rights issue, Cathay Pacific shareholders would be offered seven rights shares for every 11 existing shares at a subscription price of HK$4.68 a share, a 47% discount to the last traded price of HK$8.81 a share. The issue would raise HK$11.7 billion in fresh equity. Major shareholders Air China, which holds 29.99% of Cathay Pacific, Swire Pacific (45%) and Qatar Airways (9.99%) have committed to take up all their available entitlements in the rights issue.
In addition to the capital raising, Cathay Pacific's regulatory filing said in the longer term the airline group's business model would be "re-evaluated" with management to recommend to the board the "optimum size and shape" to meet the air travel needs of Hong Kong while keeping its financial status at a healthy level and meeting its responsibilities to shareholders. In the more immediate term, the board intended to bring in another round of executive pay cuts and a second voluntary special leave scheme for employees.
Malaysia Airlines Berhad (MAB) said yesterday it planned to operate 14 domestic routes in June and 30 international routes were due to resume in July ahead of a "normalising" of the domestic and international schedule in October. MAB group CEO, Captain Izham Ismail, said in a statement he was looking forward to welcoming back passengers. He added: “We shall continue to ensure their safety and health as well as their comfort by introducing initiatives aligned with international safety and health protocols as part of our commitment to offer passengers peace of mind throughout their journey with us.”
All Nippon Airways's (ANA) updated schedules for July, published today, showed the Japanese carrier planned to cancel 4,938 flights on 73 international routes for the month. As a consequence, ANA would operate 10% of the 5,461 international flights on 75 routes that had originally been scheduled for July before the onset of the coronavirus pandemic.
Low-cost-carrier (LCC) Jetstar Australia and New Zealand said yesterday it would resume domestic services in New Zealand from July 1. The Qantas-owned LCC will operate 75 return flights a week on five routes, representing about 60% of its operations pre the pandemic. New Zealand lifted all restrictions on domestic movement at midnight (local time) on Monday.
Fiji Airways has converted an ATR 72-600 turboprop into an all-cargo configuration capable of carrying up to eight tonnes of freight. The airline, which said the converted turboprop operated its first service between Port Vila and Nadi last week, has suspended all international passenger flights until the end of July.
