Cathay Pacific Airways aircrafts line up on the tarmac at the Hong Kong International Airport, March 6, 2020. (KIN CHEUNG / AP)
Cathay Pacific Airways will repay "as soon as possible" the Hong Kong Special Administrative Region government for the funds it provided during the height of the COVID-19 pandemic, the airline's chief executive said Monday.
CEO Ronald Lam Siu-por said Cathay Pacific has a positive cash flow that will enable the company to repay the government, although he did not give a definite timeline.
“The accumulated dividend for the preference shares today has already exceeded HK$1 billion ($128 million). The dividend is pretty substantial,” Lam said.
"We want to repay the Hong Kong government the principal and interest ASAP (as soon as possible). At the moment, we do not have a definite time but the principle is to be ASAP," he added.
We need to prepare for investment in the future because from 2025 onwards, the 3RS in Hong Kong will be fully operational. The 3RS is a once-in-a-lifetime opportunity, and so we are carefully assessing what sort of investment we need to make to contribute to the development of Hong Kong international aviation hub in the future.
Ronald Lam Siu-por, CEO of Cathay Pacific
In February 2022, the airline delayed again the payment of preferred stock dividends to the administration.
The HKSAR government had announced a recapitalization plan for the airline in June 2020 by investing about HK$27.3 billion, comprising preference shares with detachable warrants of around HK$19.5 billion and a bridge loan of about HK$7.8 billion, when Cathay was beleaguered by the pandemic.
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Lam said the airline will make investments in its fleet, network, products and services, as well as people, to rebuild the flagship carrier’s business brand to cement Hong Kong’s reputation as an international aviation hub.
“We have suffered quite a lot in the past few years because of the pandemic, and so the priority is to rebuild Cathay Pacific in terms of capacity, network, workforce and finances, and that is how we contribute to the Hong Kong aviation hub,” Lam said.
The airline projects the combined passenger capacity of Cathay Pacific and airline subsidiary Hong Kong Express Airways will return to 70 percent of pre-pandemic levels by the end of this year. The group’s combined capacity in January already exceeded 40 percent, Lam said.
To cater the demand from increased capacity, the airline group plans to hire 8,000 people in the next two years. “Last year, we recruited 2,000 people, and this year we will have 3,000 people that we plan to recruit. The recruitment of the remaining needed headcount will be completed in 2024,” he added.
For future business development, Cathay Pacific plans to boost its investments in the Three Runway System (3RS), the Guangdong-Hong Kong-Macao Greater Bay Area, digital capability, and sustainability leadership, Lam said.
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“We need to prepare for investment in the future because from 2025 onwards, the 3RS in Hong Kong will be fully operational. The 3RS is a once-in-a-lifetime opportunity, and so we are carefully assessing what sort of investment we need to make to contribute to the development of Hong Kong international aviation hub in the future,” Lam said.
The flagship carrier also sees a lot of potential in the Greater Bay Area market, for domestic travelers coming out from the city-cluster area, and also for international travelers heading to the Greater Bay Area. “We will be investing in more exposure in the market to get more awareness and preference for our brand,” Lam said.
Hong Kong is ramping up travel by air, land and sea to facilitate travelers from the Greater Bay Area to connect to Hong Kong International Airport directly so that they can get international flights out of Hong Kong.
For air travel, Cathay Pacific aims to increase flights from Hong Kong to Guangzhou when more airport slots are available. For ferry travel, the airline has built an extensive network of ferry terminals from many parts of Greater Bay Area connecting directly to the Hong Kong airport. Later this year, Hong Kong International Airport will offer intermodal service for land-coach travel via the Hong Kong-Zhuhai-Macao Bridge that goes directly to the airport.
Cathay Pacific is also beefing up services for travelers from the Greater Bay Area, such as bringing check-in services in the Greater Bay Area with the airline’s uniformed staff, and the carrier will launch its first lounge in the Shekou ferry pier this year.
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In digital capability, the company will invest in technologies such as machine learning, the internet of things, and blockchain to revamp the company’s business data. For sustainability leadership, the airline has already announced certain targets and will continue to progress.
The company is making positive cash flow so that it can generate sufficient financial resources to fund those future investments. “We are operating cash-positive in the second half of 2022 already. Our airlines have been improving both operationally and financially,” Lam said.
Looking forward, the airline CEO is confident Hong Kong will become an international aviation hub again.
“Other airlines usually took more than a year to ramp up capacity from 30 percent to 70 percent, and the fact is that we are now already at 40 percent, aiming at 70 percent. I do not think we are in any way slower than any of them. It is just that we started a bit late compared with many of them, and we will catch up,” Lam said.
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