Cathay Pacific given extension to draw down $1 bln govt loan

Cathay Pacific Airways Ltd said on Tuesday that the Hong Kong government had agreed to extend the drawdown period for a HK$7.8 billion ($1.01 billion) loan facility by a year to June 2022, giving it more flexibility to manage liquidity.

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% from 2019 levels follows a decision by rival Singapore Airlines Ltd (SIAL.SI) last month to issue S$6.2 billion ($4.69 billion) of convertible bonds.

The Singapore Airlines convertible bonds, underwritten by majority shareholder Temasek Holdings (TEM.UL), 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.