(Updates with government appointing board members to Cathay)
The Hong Kong government named its two representatives to the board of directors of Cathay Pacific Airways following shareholder approval of a US$5 billion bailout plan funding by the government.
Carlson Tong and Rimsky Yuen have been designated as the observers of the board of the Cathay Group. “Mr Tong has been active in public and community services and possesses extensive knowledge and significant experience in the financial services sector. He was a board member of the Airport Authority Hong Kong and is familiar with the operation of the Hong Kong aviation industry. Mr Yuen is a seasoned legal expert in commercial and civil matters with vast experience in public services and administration. They are suitable candidates to serve as observers to the Cathay Group’s board. I am confident that they will help safeguard the Government’s investment interest in the Cathay Group,” Financial Secretary Paul Chan, said.
Tong is a chartered accountant. He served as the chairman of the Securities and Futures Commission from 2012 to 2018 and was a member of the Exchange Fund Advisory Committee from 2010 to 2020. He had been a board member of the Airport Authority Hong Kong since 2017 until he left the post in July 2020. He is currently the chairman of the University Grants Committee and an Independent Non-Executive Director of Standard Chartered Bank. Yuen is a senior counsel with key areas of practice including commercial disputes and related matters. He was the secretary for Justice of the Hong Kong Special Administrative Region Government from 2012 to 2018. Yuen is currently a member of the Exchange Fund Advisory Committee.
Shareholders of Cathay Pacific Airways earlier approved a government-led US$5 billion bailout of the airline. The equity and debt support worth HK$39 billion from the city’s government and the flag carrier’s major shareholders threw a lifeline to the airline that has, like most other carriers, been deeply affected by the COVID-19 pandemic. Cathay had the misfortune to also be hurt by anti-government protests in 2019 that shut down its home base for two consecutive days and which also saw the airline lose top officials after they incurred China’s wrath for their attitudes in dealing with the protesters. Hong Kong has weathered the COVID-19 storm better than some locales, but a recent uptick in cases could further increase restrictions the special administrative region has imposed on travellers.
The airline announced on Monday evening (13 July) that all five resolutions presented by the company passed with more than 99 percent support from shareholders. The result was widely expected. Advisory group Institutional Shareholder Services had recommended shareholders vote for the rescue plan, as “the recapitalisation is essential for the group in order to build up its liquidity, strengthen its financial position, and weather the impact of the COVID-19 pandemic.” However, the proxy adviser recommended voting against the company’s resolution to grant a general share issuance mandate, since “unlike the recapitalisation proposals, the general share issuance mandate is a blanket authorisation.” But that was also passed with overwhelming support.
When the recapitalisation plan was announced last month, Cathay Chairman Patrick Healy said it was the only way to save the airline from collapse. The plan also gave two seats on the airline’s board to the government. The Hong Kong government has justified the bailout, unprecedented locally, as necessary to preserve the city’s role as an international transport hub amid the pandemic and has said it would not be a long-term shareholder of the airline. On Monday, a spokesperson said the government had “nothing further to add” to comments last month about the bailout.
In May, the most recent month for which it has published figures, Cathay carried 99.4 percent fewer travellers than it did a year before, operating at 3 percent of its previous passenger capacity. At the time, it said it would bring operating capacity up to 5 percent in June.
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