HONG KONG (Reuters) – Shares in Hong Kong’s Cathay Pacific Airlines plunged on Thursday after the struggling airline revealed that it sold HK $ 6.7 billion in bonds in an effort to stem its rampant cash burn.
Shares of Cathy were trading down as much as 8.4%, days after it warned that new quarantine measures planned for travelers and cargo crew arriving in Hong Kong would further affect its finances.
Cathay said Thursday it will offer a five-year convertible bond due in February 2026 that can also be converted into shares at a premium of 30% higher than the previous day’s close.
Like all major airlines, Cathay has seen its business evaporate during the coronavirus pandemic, but Hong Kong Airlines is particularly vulnerable because it has no local market to return to.
It has been burning through cash at a rate of 1-1.5 billion HK dollars a month but executives fear that this will rise further if Hong Kong authorities implement strict quarantine controls for cabin crews.
Currently, most arrivals to Hong Kong must quarantine in designated hotels for a period of three weeks, although cabin crew and other vital logistics functions have waivers.
But Hong Kong has announced plans to impose a two-week quarantine on all aircraft crews on long-haul cargo and passenger flights.
On Monday, Cathy said the measures would increase its cash burn by between 300 and 400 million HK dollars a month and force it to reduce its already limited flight capacity by about two-thirds.