HONG KONG – Shares in Hong Kong's marquee carrier Cathay Pacific plunged today after the struggling airline unveiled a HK$6.7 billion (RM3.5 billion) bond sale to try to stem its rampant cash burn.
Cathay's shares were trading as much as 8.4% down, days after it warned new quarantine measures planned for passenger and cargo crew arriving here would further dent its finances.
Cathay today said it would offer five-year convertible bonds maturing in February 2026 that could also be converted into shares at a 30% premium above the previous day's close.
Like all major airlines, Cathay has seen its business evaporate during the coronavirus pandemic but the Hong Kong carrier is especially vulnerable because it has no domestic market to fall back on.
It has been burning through cash at a rate of HK$1-1.5 billion a month but executives fear this will spike further if authorities here make good on stricter quarantine controls for aircrew.
Currently, most arrivals into Hong Kong must quarantine in dedicated hotels for three weeks, although aircrew and other vital logistic jobs have exemptions.
But Hong Kong has announced plans to enforce a two-week quarantine on all aircrew on long-distance cargo and passenger flights.
On Monday, Cathay said those measures would increase its cash burn by HK$300-400 million a month and force it to cut its already limited flight capacity by almost two-thirds. – AFP, January 28, 2021
