HONG KONG – Cathay Pacific Airways will buy back the remaining 50 percent of preference shares from the Hong Kong Special Administrative Region government on July 31, the company announced on Friday.

The HKSAR government welcomed the plan, expressing its pleasure at the Hong Kong flag carrier’s decision.

The stake being bought back by the airline is valued at HK$9.75 billion ($1.25 billion), the government said in a notification.

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Cathay will pay any remaining unpaid preference share dividends up to July 31, bringing total preference share dividends paid to the government over its holding period to HK$2.44 billion.

The HKSAR government's investment in the airline played an important role at a critical time, and the airline's operational and financial situation have improved with the full resumption of normal travel between Hong Kong and other places.

Spokesman, HKSAR Govt

The preference shares were issued to the SAR government in June 2020 as part of the Cathay group's recapitalization financing. The government invested HK$27.3 billion in the group through the Land Fund, comprising preference shares with detachable warrant of HK$19.5 billion and a bridging loan of HK$7.8 billion, with a view to safeguarding the city’s position as an international aviation hub in the face of the unexpected impact of the COVID-19 pandemic.

“The HKSAR government's investment in the airline played an important role at a critical time, and the airline's operational and financial situation have improved with the full resumption of normal travel between Hong Kong and other places,” said a government spokesman.

Pursuant to the investment agreement, in July 2020, the government designated fellow certified public accountant Carlson Tong and senior counsel Rimsky Yuen as the observers of Cathay group's Board of Directors, until the group repays the government in full the drawn bridge loan and interest and redeems all preference shares from the government.

The government thanked the two observers for their valuable contributions over the past few years.

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“We expect the airline to fully restore its capacity to the pre-pandemic level at full speed, actively expand its passenger and cargo flight network, and continuously enhance its service quality, so as to further support the reinforcement and enhancement of Hong Kong's status as an international aviation hub,” said the spokesman.

Pointing out that major air service providers based in Hong Kong are an important component of the city's status as an international aviation hub, the government spokesman said the Hong Kong International Airport recorded significant growth in air traffic in 2023 with the full resumption of travel, and demand for flights to and from Hong Kong from all over the world continued to rise.

“Both passenger traffic and flight movements during the peak travel season have returned to 80 percent of the pre-pandemic levels, and are expected to fully recover by the end of this year.”

Between April 2023 and March this year, passenger traffic at the HKIA rose by more than 260 percent to 45.2 million, while the number of flight movements rose by more than 90 percent to 310,000. In the first five months of 2024, over 18 million visitors travelled to Hong Kong, government data showed.

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“To better complement our country's development of the "Air Silk Road" and leverage the opportunities brought about by the Three-Runway System, the HKSAR government will continue to strengthen aviation services on existing major routes and routes along the Belt and Road with potential, including destinations in Europe, Africa, South America and Asia,” said the spokesman.

The Airport Authority Hong Kong will also continue to support and encourage airlines to launch and increase flights to and from the city and work with relevant parties to step up publicity efforts to boost the demand for travel to Hong Kong for leisure and business purposes, the spokesman added.