Hong Kong government to invest billions to save Cathay Pacific
The airline lost US0 million as a result of the pandemic. Some 330,000 jobs in the air transport business are at stake as is Hong Kong’s role as a regional hub. Passenger demand for air travel worldwide dropped 94.3 per cent in April. The United States, Germany and Italy have bailed out their airline companies.
Hong Kong (AsiaNews) – Hong Kong plans to invest HK$ 40 billion (US$ 5.2 billion) to save Cathay Pacific, its main airliner, hit hard by the effects of the coronavirus pandemic.
The company’s main shareholders – Swire Pacific, Air China and Qatar Airways – have given the green light to the operation.
In return, the government will get a stake in the company and appoint two observers on its board, Cathay chairman Patrick Healy said in a statement today.
This is the first time that Hong Kong authorities have directly injected money into a private company.
Some 330,000 jobs are at stake in the air transport industry, threatened by the pandemic crisis, as is Hong Kong’s role as a regional hub.
Cathay Pacific, which has a fleet of 238 planes, holds approximately 50 per cent of runway slots at Hong Kong International Airport
Last year, it carried over 35.2 million passengers, with HK$ 107 billion (US$ 13.8 billion) in revenue. In the first four months of this year, it lost HK$ 4.5 billion (US$ 580 million).
The crisis of the air travel industry began in February when most countries closed their air space to foreign carriers to contain the spread of COVID-19.
According to the International Air Transport Organisation (IATA), passenger demand dropped by 94.3 per cent in April.
At the end of May, daily flights rose by 30 per cent over to the low point in April, but IATA estimates that air travel will return to pre-emergency levels only in 2023.
So far, seven international airlines have filed for bankruptcy or suspended their operations. In Asia, Thai Airways’s bankruptcy proceedings will take five years.
Like Hong Kong, other governments have rushed to the rescue of their national companies. In the United States, carriers have benefitted from a US$ 50 billion bailout. The Lufthansa Group is set to get US$ 12.3 billion from the governments of its national airlines in Germany, Switzerland, Belgium and Austria. Italy’s Alitalia will get US$ 3.4 billion in government aid.