Explainer | Why Cathay Pacific’s bailout was not just important for the airline but Hong Kong as a whole

Name: HK$30 billion bailout for Cathay Pacific is necessary, Hong Kong government says
Uploaded: 2020-06-10T04:00:20.000Z
Duration: 1 min 27 s
Description: HK$30 billion bailout for Cathay Pacific is necessary, Hong Kong government says

Financial Secretary Paul Chan said city’s air network underpinned range of industries including financial services and tourism

Air cargo reached 500 million tonnes in 2018 and was worth US$473 billion to Hong Kong

Reading Time:4 minutes

Why you can trust SCMP

Cathay Pacific has been handed a multibillion-dollar rescue package by the Hong Kong government. Photo: Winson Wong

Kathleen MagramoandLilian Cheng

Published: 12:00pm, 10 Jun 2020Updated: 12:22pm, 10 Jun 2020

Cathay Pacific has become the first publicly listed company to be bailed out by the Hong Kong government, after the halt in global travel left an airline already struggling from the impact of last year’s anti-government protests haemorrhaging cash.

Cathay and its sister airline Cathay Dragon suffered a combined unaudited loss of HK$4.5 billion for the first four months of the year, as travel restrictions imposed to combat the spread of the coronavirus drastically reduced passenger numbers.

Here is why the bailout plan was important, not only for the survival of the city’s flagship carrier but also its status as a leading international aviation hub.

01:27

HK$30 billion bailout for Cathay Pacific is necessary, Hong Kong government says

Why was there a government bailout?

The airline has been losing money at a rate of HK$2.5 billion to HK$3 billion per month since February and passenger capacity has also plummeted by 97 per cent, according to an exchange filing on Tuesday.

Financial Secretary Paul Chan Mo-po said the objectives for the bailout were to help protect Hong Kong’s role as a leading international aviation hub, as well as the city’s long-term overall economic development, while generating a reasonable return for the government.

“Our comprehensive international air network not only facilitates the flow of passengers and cargo through Hong Kong, but also underpins the development of a wide spectrum of economic activities, notably trading and logistics, finance services and tourism,” he said.