Cathay Pacific given extension to draw down $1 billion government loan

(Reuters) - 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.

The bridge loan was part of a $5 billion rescue package led by the Hong Kong government and Cathay's major shareholders Swire Pacific Ltd and Air China Ltd last year to help the airline weather the COVID-19 crisis.

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 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, 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.

($1 = 7.7591 Hong Kong dollars)

($1 = 1.3224 Singapore dollars)

(Reporting by Jamie Freed in Sydney; Editing by Muralikumar Anantharaman)

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