Cathay Pacific (CX, Hong Kong Int'l) shareholders have approved, with 99% support, a government-led HKD39 billion Hong Kong dollar (USD5 billion) bailout of the airline, the Nikkei Asian Review reported.

The July 13 vote on the package of measures of equity and debt support, emanating from the government of Hong Kong and the carrier's major shareholders, comes as observers expect the company to post a net loss of more than HKD8 billion (USD1 billion) for the first half of 2020.

The advisory group Institutional Shareholder Services had recommended shareholders to approve 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."

The plan includes the sale of preference shares and a rights issue, which the adviser had recommended voting against, as "unlike the recapitalisation proposals, the general share issuance mandate is a blanket authorisation." But the shareholders supported this too.

Cathay, which lacks domestic services that can cushion losses in international traffic, has said that the bailout will give it enough working capital for at least the next 12 months.

The airline saw 99.4% fewer passengers in May year-on-year, operating at 3% of capacity, pledging to raise operating capacity to 5% for June. Its low-cost unit HK Express has been completely grounded since March. The budget carrier has said it will resume flights on August 2, but a third wave of the pandemic in Hong Kong may force it to shelve that plan.

Meanwhile, the Hong Kong government designated two observers, Carlson Tong and Rimsky Yuen, to Cathay Pacific's board on July 14, the South China Morning Post reported. They will oversee the rescue measures' implementation. It is the first time the government will have a direct interest in the flag carrier’s affairs.

Tong was chairman of the territory's Securities and Futures Commission from 2012 to 2018, is a 30-year veteran with KPMG, and was for a period an Airport Authority Hong Kong board member. Yuen, a lawyer, was formerly the top justice official in the Hong Kong government administration.

A source at Cathay Pacific also revealed this week that the company was considering sending "more than 50" of its widebody aircraft to less humid locations than Hong Kong Int'l for storage as it reviews the size of its fleet, Reuters reported.

Large Asia-Pacific carriers such as Air New Zealand, Qantas, and Singapore Airlines have already taken this step, dispatching aircraft to desert locations in Australia and the United States for long-term storage and possible early retirement. The source named Dubai and Australia as locations Cathay was looking at.

Cathay Pacific currently operates a fleet of twenty-seven A330-300s, twenty-four A350-900s, twelve A350-1000s, seventeen B777-300s, and fifty-one B777-300(ER)s, as well as six B747-400(ERF)s and fourteen B747-8(F)s, the ch-aviation fleets advanced module shows. Its Cathay Dragon subsidiary operates twenty-six A330-300s as well as fourteen A320-200s and eight A321-200s, while HK Express has eight A320-200s, five A320-200neo, and eleven A321-200s.