Cathay Pacific Completes $2.5B Buyback

Cathay Pacific Completes $2.5B Buyback

Luisa Dominguez
2 min read

Cathay Pacific's $2.5 Billion Government Share Buyback Signals Market Confidence

Cathay Pacific is set to finalize the repurchase of HK$19.5 billion ($2.5 billion) in government preference shares by the end of this month, marking a significant milestone in its post-pandemic recovery. This move not only signifies the complete redemption of shares crucial for the airline's survival during Covid-19 but also heralds the cessation of government-appointed observers on its board. Currently operating at 80% of pre-Covid capacity, Cathay Pacific aims to fully reinstate its flight levels by the first quarter of next year. The airline's expansion plans, including the resumption of flights to Cairns, Ningbo, and Riyadh, reflect a more assertive approach to growth. The government reaped HK$2.4 billion in dividends from the shares over the holding period. Cathay Pacific had initially intended to make the final repayment by July while remaining cautious about rapid capacity escalation, having learned from past struggles with pilot shortages and flight cancelations.

Key Takeaways

  • Cathay Pacific to complete $2.5 billion government share buyback by the month-end.
  • Airline operating at 80% pre-Covid capacity, targeting full restoration by Q1 2025.
  • Cathay expanding network with flights resuming to Cairns, Ningbo, and Riyadh.
  • End of government oversight as Cathay fully redeems preference shares.
  • Cathay exercising caution about rapid capacity increase post previous flight cancellations.


Cathay Pacific's $2.5 billion repurchase reinforces its financial robustness, terminating government support and oversight. This maneuver, alongside operational expansion, speaks volumes about the airline’s confidence in market recovery. In the short term, it bolsters investor trust and liquidity. In the long term, achieving full capacity restoration by Q1 2025 positions Cathay for growth, emphasizing the pivotal role of judicious capacity management to avoid previous operational hiccups. The government's divestment generating HK$2.4 billion reflects a strategic exit mutually benefiting all parties involved.

Did You Know?

  • Government Preference Shares:
    • Explanation: Government preference shares represent a type of equity issued by a company, often carrying preferential rights over common shares, such as priority in dividend payments. For Cathay Pacific, these shares were issued to the government during the pandemic to ensure the airline's survival, with the government receiving dividends over the holding period.
  • Pilot Shortages and Flight Cancellations:
    • Explanation: Pilot shortages refer to a scenario where an insufficient number of qualified pilots are available to operate all scheduled flights, resulting in cancellations or delays. This can stem from factors such as training capacity constraints, industry growth, or attrition. Cathay Pacific has remained cautious about swiftly increasing capacity to avert a recurrence of such issues, which can significantly impact service reliability and customer satisfaction.
  • Pre-Covid Capacity:
    • Explanation: Pre-Covid capacity denotes the operational levels of a business, such as an airline, before the COVID-19 pandemic disrupted global operations. For Cathay Pacific, this term indicates the levels of flights and services provided before the pandemic, which they are now striving to reinstate and even surpass as part of their recovery strategy.

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