Hong Kong flag carrier Cathay Pacific has secured a near $4 billion bailout from the government to help it weather the coronavirus crisis, according to reports.
The South China Morning Post reported on Tuesday that Cathay Pacific will undergo a $5.2 billion capital restructuring in what is the first time the Hong Kong government has directly injected money into a private company.
The Hong Kong government will assume a stake in the airline without seeking full boardroom status, according to the report. The government will instead have two “observers” on the board.
Cathay Pacific halted shares in the company on Tuesday pending an announcement from the carrier, according to a statement with the bourse.
In February, the carrier asked 27,000 employees to take unpaid leave as it said it expected to incur a “substantial loss” in the first half of 2020.
Hong Kong’s Cathay Pacific was hit particularly hard by the initial outbreak in neighbouring China, which damaged air travel demand in the Far East. The outbreak came on the back of months of protests and political turmoil in the country, which had caused further disruption to the business.
Cathay Pacific’s earning fell nearly 30% in 2019 to $218 million.