Hong Kong carrier Cathay Pacific is preparing to issue a three- or five-year fixed-rate Hong Kong dollar bond. A global investor call is scheduled for Tuesday, with the bond deal potentially launching Wednesday, according to a term sheet.
The planned issuance occurs as airlines globally confront a difficult operating environment. Surging jet fuel prices, driven by geopolitical conflicts, are impacting the sector. Cathay Pacific recently announced flight cutbacks from mid-May through June, citing soaring fuel costs. The airline will reduce approximately 2% of its scheduled passenger flights, while its budget arm, HK Express, will cut about 6%.
These adjustments follow broader industry challenges, including the closure of the Strait of Hormuz affecting fuel supplies and leading airlines to hike fares and reduce flights. Despite these headwinds, Cathay's CEO previously indicated plans to expand passenger capacity by 10% this year, anticipating strong demand for long-haul routes as travelers avoid disrupted Middle Eastern hubs.