(Reuters) – Cathay Pacific Airways Ltd said on Tuesday that the Hong Kong government has agreed to extend the HK $ 7.8 billion ($ 1.01 billion) credit line by a year until June 2022, giving it more flexibility in liquidity management.
The bridge loan was part of a $ 5 billion bailout package implemented by the Hong Kong government and Cathay’s main shareholders, Swire Pacific Ltd and Air China Ltd, last year to help the airline weather the COVID-19 crisis.
Cathay CEO Augustus Tan said in a statement that the airline has yet to take advantage of the loan as it has taken a number of cash-saving measures, but the renewal will give it more flexibility in managing its liquidity position.
As of December 2020, Cathay had HK $ 28 billion in liquidity and also raised HK $ 6.74 billion in convertible bonds in February and $ 650 million in bonds last month.
The airline’s move towards the greatest possible access to liquidity at a time when passenger numbers fell more than 99% from 2019 levels followed rival Singapore Airlines Ltd’s decision last month to issue S $ 6.2 billion in convertible bonds ( $ 4.69 billion).
Singapore Airlines’ convertible bonds, signed by majority shareholder Temasek Holdings, were an optional part of a S $ 15 billion bailout package announced last year under the leadership of a government investor.
Both airlines have no domestic markets at a time when international borders are still largely closed.
($ 1 = HK $ 7.7591)
($ 1 = S $ 1.3224)
(Reporting by Jamie Frieda in Sydney; editing by Muralikumar Anantaraman)