Hong Kong’s flagship carrier Cathay Pacific on Wednesday posted its largest ever half-yearly loss of almost HK$9.9 billion for the first six months of this year as the coronavirus pandemic battered the global aviation-and-travel business.
Cathay Pacific Airways said in its interim results report it suffered a net loss of HK$9.86 billion in the first half of 2020 – the second time in three years that the airline had plunged into the red for the same period. For the first half of last year, it reported a profit of HK$1.34 billion but, for the same period in 2018, the company registered a loss of HK$263 million.
Cathay Pacific Airways said in its interim results report it suffered a net loss of HK$9.86 billion in the first half of 2020 – the second time in three years that the airline had plunged into the red for the same period
Chairman Patrick Healy called the January-June period this year the “most challenging” the group has faced in its 70-year history, warning that the short term future will be “extremely challenging and tough”.
He said the airline does not expect to see a meaningful recovery in passenger business for some time as a looming global recession and intensifying geopolitical tensions will have a “negative impact” on Cathay’s air-travel and cargo demand.
Amid a drastic drop in passenger demand resulting from worldwide travel and border controls and quarantine arrangements to contain the pandemic, Cathay Pacific carried 4.4 million passengers in the first half of 2020 – down 76 percent from the same period last year. From April to May, it carried a daily average of 500 passengers.
Cathay’s Chief Executive Officer Augustus Tang said the carrier has cut its passenger capacity to 8 percent for August and September, while the capacity for November and December would depend on the travel curbs around the world.
The flag carrier’s cargo business, however, performed better than passenger operations in the first half due to an imbalance between capacity and demand in the cargo market, the company said.
Its cargo revenue reached HK$11.177 billion – an increase of 8.8 percent over the same period in 2019. Freight yield went up by 44.1 percent due to strong cargo demand.
Ronald Lam – the group’s chief customer and commercial officer – said Cathay’s cargo performance peaked in May and remained high in June-August.
The outlook of the group’s cargo business is still positive for the rest of the year, he said.
Cathay Pacific unveiled a HK$39 billion recapitalization plan in June, including the HKSAR government’s HK$27.3 billion bailout package. The recapitalization program was completed on Wednesday.
Healy said the recapitalization represents the very first step in ensuring the company’s long-term survival. As to whether Cathay Dragon – the group’s wholly owned subsidiary – would be restructured, he said recommendations will be made to the board in the last quarter of this year to ensure the group’s sustainable development, and all options are on the table.
Meanwhile, the Civil Aviation Department confirmed on Wednesday it has received an application for an air operator’s certificate from Chinese mainland-backed Greater Bay Airlines Co.
It said the application is being processed and, if successful, Greater Bay Airlines would become Hong Kong’s fifth passenger airline to go into service.
Healy said it’s great to see other industry players having confidence in the city’s aviation industry in the long term. He said Cathay Pacific welcomes competition with more than 100 other airlines.
