FS Responds To Cathays Restructuring

The Government has required Cathay Pacific Airways to fully consider the potential impact on Hong Kong’s status as an international aviation hub when restructuring its business, Financial Secretary Paul Chan said today.

In a statement issued in response to media enquiries on Cathay Pacific’s business restructuring plan, Mr Chan said the aviation industry worldwide has been hard hit by the COVID-19 pandemic.

Mr Chan pointed out that Cathay Pacific, as Hong Kong's most important local airline, is also facing unprecedented operational and financial pressure.

He said if the issue of the group’s life-or-death is not properly addressed, the situation would harm the city’s international aviation hub status and development in the region and adversely impact other local economic activities.

“The purpose of the Government's investment in the Cathay Group through the Land Fund is to help the group weather the extreme business environment, uphold Hong Kong's status as an international aviation hub in the region and keep any adverse impact to other aspects of the economy at bay, while at the same time generate a return for the Government.

“When we injected capital this June, we stated clearly that the Government has no intention of becoming a long-term shareholder of the Cathay Group or participating in its daily operation, which is still in the hands of its board of directors and management.

“At that time, the Cathay Group had already said that it will pay close attention to the business environment and conduct assessment, and submit in the fourth quarter of this year to the board of directors a proposal on its mode of business operation and the scale most suitable to the group to satisfy Hong Kong’s air travel demand and sustain the group’s operation.”

The airline subsequently filed an application under the Government’s Employment Support Scheme to continue its operation while safeguarding employment, he said.

The Financial Secretary noted the business restructuring plan is a commercial decision by the airline.

“Though without the right to vote, the two observers appointed by me to the Cathay Group's board of directors have expressed opinions on its plan and reminded the group’s management of the need to keep the impact caused to its employees and the society to the minimum in restructuring its business. 

“As the supervisory body, the Transport & Housing Bureau has already required the Cathay Group, in adjusting its operation mode and scale, to fully consider the potential impact on Hong Kong’s status as an international aviation hub and the aviation network.”

The bureau also required the group to ensure that it is well equipped to start off again after the epidemic and provide impetus for the relaunch of the local aviation industry as well as the city’s overall economy, Mr Chan added.