The Hong Kong Government is giving Cathay Pacific a bailout package, which forms the majority of the broader HK$39 billion (US$5 billion) recapitalisation plan outlined by the airline today to overcome the coronavirus crisis.

Under the new agreement, the Hong Kong Government will also have a six per cent stake in Cathay Pacific and has the right to have “two observers” on the airline’s board.

According to Hong Kong-based newspaper South China Morning Post, the Hong Kong government will provide a lifeline of HK$27.3 billion to the airline.

“We are grateful to the HKSAR Government’s capital support, which allows Cathay Pacific to maintain our operations and continue to contribute to Hong Kong’s international aviation hub status,”  said Cathay Pacific chairman Patrick Healy in a statement posted on the carrier’s website.

Cathay Pacific also announced a three part HK$39 billion ($5 billion) recapitalisation plan today designed to provide the airline “with sufficient funds to withstand the industry-wide downturn”.

The airline group has previously taken actions such as cutting passenger capacity by 97 per cent, deferring new aircraft orders, and asked its employees to take unpaid leave in an effort to preserve cash in the wake of the coronavirus crisis.

“Despite all these measures, the collapse in passenger revenue to only around 1 per cent  of prior year levels has meant that we have been losing cash at a rate of approximately HK$2.5 billion to HK$3 billion per month since February, and the future remains highly uncertain,” said Healy.

The carrier said in its statement that it is “even more vulnerable than most of its global airline peers” since unlike many other airlines, it does not have a domestic network to rely on.

The Hong Kong carrier and its two main shareholders, Swire Pacific Ltd. and Air China Ltd., suspended trading of their shares on Tuesday morning “pending an announcement”, according to Bloomberg.

Swire owns a 45 per cent stake in Cathay and Air China owns a 30 per cent stake in the airline.