Cathay Pacific has announced that it has bought back 50 pc of its preference shares from the Hong Kong SAR government for USD 1.25 billion, with plans to acquire the remaining 50 pc by July 2024. The airline also bought six A350 Freighter aircraft from Airbus and plans to acquire 20 more by the end of 2029 to replace its aging cargo fleet of Boeing 747 jets.

Buoyed by a return to profits, Hong Kong’s flag carrier Cathay Pacific says it has bought back 50 pc of preference shares from the HKSAR government for HKD 9.75 billion (USD 1.25 billion). The shares were part of the airline restructuring during the depths of the Covid-19 pandemic.

According to a press statement by Cathay Pacific, the airline received a total of HKD 19.5 billion (USD 2.49 billion) in recapitalisation financing from the Hong Kong government in 2020. 

The airline has also signalled its intent to buy the remaining 50 pc by the end of July next year, subject to market conditions and its business operations.

It adds that Cathay Pacific Airways swung to an interim profit of HKD 4.3 billion from a year ago and plans to buy back 50 percent of preference shares held by the government by the end of the year.

That compared with a loss of HKD 5 billion in the first six months last year.

“We are extremely grateful to both the HKSAR Government and to our shareholders for the continued support they have provided both during and since the pandemic. The investment by the Government was essential in supporting the Cathay Group and upholding Hong Kong’s status as an international aviation hub through the Covid-19 crisis. That we have been able to redeem half of the preference shares is a testament to the hard work of our people and the encouraging progress we have made in our journey to rebuild. We will continue to commit ourselves toward our vision to become one of the world’s greatest service brands and the pride of Hong Kong once again,” says Group Chief Executive, Ronald Lam.

The airline says that its interim result, the best since 2010, includes a one-off non-cash gain of HKD 1.9 billion from a dilution of its stakes in Air China. Revenue surged 135 pc to HKD 43.6 billion from a year earlier, with passenger revenue jumping 11 times to HKD 25 billion. Cargo revenue, however, dropped by 11.6 pc to HKD 10.7 billion due to weaker global demand.

With the pandemic restrictions now a thing of the past, Cathay Pacific is currently enjoying pent-up travel demand that has pushed the carrier to increase capacity on select routes and reintroduce routes to destinations worldwide, adds the airline in its press statement.

Cathay Pacific buys six A350 Freighter aircraft from Airbus

In a separate announcement, Cathay Pacific says it has placed an order to purchase six Airbus A350 freighters for a basic price of USD 2.71 billion, potentially replacing its aging cargo fleet of Boeing 747 jets.

Under the deal, Cathay says it has also secured the right to acquire 20 more Airbus A350 freighters. Cathay expects the six freighters to be delivered by the end of 2029.

Cathay’s preferred pick of Airbus to supply the new freighters comes despite operating an all-Boeing fleet of 20 747 freighters for its core cargo unit.

“These highly fuel-efficient, next-generation freighters will provide important additional cargo capacity, expand our global network and contribute to our sustainability leadership goals,” says Lam.

Cathay’s choice for the next phase of cargo development is seen as a key test for the two freighters, given that the airline operates Boeing 777 and A350 passenger models. The Airbus freighters will link Hong Kong and the Chinese mainland coupled with long-haul destinations in North and South America as well as Europe, the airline says.