Hong Kong’s flagship carrier Cathay Pacific Airways Ltd., announced on Tuesday a recapitalization plan worth HK$39 billion ($5 billion) led by the Hong Kong government.
The carrier has been losing cash up to $387 million each month since the month of February, grounding most of its planes, except for cargo and passenger flights to selected destinations of Tokyo, Beijing, L.A., and Sydney.
According to Cathay, the company will receive $2.5 billion from Aviation Ltd., a government-owned entity and will further draw from a $1 billion bridging loan from the same entity. This plan could be beneficial for the carrier in the long-term post Covid-19 and help reduce the autonomy of the carrier in the light of political protests in Hong Kong.
Chairman Patrick Healy said that the deal will help avoid a potential collapse and the carrier will redouble their efforts to transform their business. Followed by a market capitalization of $4.5 billion this year, the carrier was suspended Tuesday. The airline said that they would go for another round of executive cuts and employee leaves regarding the airlines’ future business.
Cathay, like many airlines around the world has been bailing out flights, staggering from the effects of the coronavirus pandemic.