Hong Kong-based carrier Cathay Pacific Airways sounded a stark profit warning on Friday, projecting a net loss of HK$9.9 billion ($1.3 billion) for the first half of this year as the coronavirus pandemic battered travel demand.
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In a filling to the Hong Kong Stock Exchange, the airline said the loss includes impairment charges of HK$2.4 billion, which mainly relate to 16 aircraft that are unlikely to re-enter meaningful economic service before next summer, together with certain airline service subsidiaries’ assets.
The estimated first-half loss would be Cathay’s largest half-yearly loss in at least a decade. It posted a net profit of HK$1.35 billion for the first half of 2019, before the social unrest erupted
The estimated first-half loss would be Cathay’s largest half-yearly loss in at least a decade. It posted a net profit of HK$1.35 billion for the first half of 2019, before the social unrest erupted.
Cathay Pacific and its subsidiary Cathay Dragon flew 27,106 passengers in June — down 99.1 percent year-on-year. The passenger load factor dropped almost 60 percentage points to 27.3 percent, while capacity, measured in available seat kilometers, plunged more than 96 percent. The two airlines carried only about 900 passengers a day on average.
In the first six months of 2020, the number of passengers carried dropped by 76 percent, while capacity fell 65.7 percent, compared to the same period last year.
“Demand continued to be very weak in June with our airlines carrying less than 1 percent of the passengers we carried in the same month in 2019. We operated about 4 percent of our normal passenger flight capacity in June. This was slightly more than we operated in May, having resumed services to some destinations like New York, San Francisco, Amsterdam and Melbourne in late June,” said Cathay’s Chief Customer and Commercial Officer Ronald Lam Siu-por.
Transit services at Hong Kong International Airport resumed on June 1 after being suspended on March 25 as part of the emergency response to the global public-health crisis.
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Lam said they’ve observed a gradual pickup in connecting passenger demand as the ban on transit traffic through HKIA was being partially eased. By late last month, transit traffic had reached about 32 percent of overall traffic, with notable demand from Southeast Asian destinations, such as the Philippines and Vietnam, to North America.
However, he said the international aviation landscape remains “incredibly uncertain” with border restrictions and quarantine measures still in place worldwide, adding they’ve yet to see any significant sign of an immediate improvement.
Cathay said it plans to operate 7 percent of normal passenger capacity this month before raising it to about 10 percent in August.
The cash-strapped carrier was thrown a HK$27.3 billion lifeline by the Hong Kong government last month under a recapitalization plan.
It has also accepted government employment subsidies that prevent it from cutting Hong Kong-based staff through August. Cathay Pacific was among the fourth batch of companies granted government wage subsidies under the Employment Support Scheme, taking up the biggest share of HK$458 million, while Cathay Dragon received HK$69 million.
