Cathay Pacific reports first-half loss of $1.27bn
published : 12 Aug 2020 at 13:45
HONG KONG: Hong Kong carrier Cathay Pacific said Wednesday it lost HK$9.9 billion (US$1.27 billion) in the first half of this year as the coronavirus pandemic sent passenger numbers tumbling, eviscerating its business.
"The first six months of 2020 were the most challenging that the Cathay Pacific Group has faced in its more than 70-year history," chairman Patrick Healy said in a stark statement announcing the results.
"The global health crisis has decimated the travel industry and the future remains highly uncertain, with most analysts suggesting that it will take years to recover to pre-crisis levels," he added.
Before the pandemic struck, Cathay was one of Asia's largest international airlines and the fifth largest air cargo carrier globally. But like others worldwide, it has been battered by the evaporation of global travel.
The firm said it carried 4.4 million passengers in the first six months of 2020 -- a 76% plunge on-year -- as the new disease burst out of central China and then spread around the world.
At the height of the global lockdowns in April and May, its entire fleet was averaging just 500 passengers a day.
Cargo remained the lone bright spot, rising 9% on-year to HK$11,177 million. Demand was driven up by a squeeze on space for cargo, which is often carried in the hold of passenger planes.
Cathay is especially vulnerable as it has no domestic market to fall back on, and it was already under pressure after months of huge protests in Hong Kong last year caused passenger numbers to plunge.
It was also punished by Beijing last year when some of its 33,000 employees expressed support for Hong Kong's pro-democracy movement.
The airline's stock surged more than 8% to HK$5.70 in afternoon trade in Hong Kong.
Healy said 2020 had started promisingly, with signs that demand was beginning to return after the sometimes-violent protests had put travellers off visiting the financial hub.
But "the global health crisis has decimated the travel industry and the future remains highly uncertain, with most analysts suggesting that it will take years to recover to pre-crisis levels", he warned.
In response to the health crisis, Cathay has tried to save cash by reducing capacity, cutting executive pay, introducing voluntary leave schemes and slashing other non-essential costs.
It has so far refrained from any large-scale job cuts.
Hong Kong's government also came to its rescue earlier this year with a HK$39-billion recapitalisation plan.
The deal allowed Cathay to raise some HK$11.7 billion in a rights issue on the basis of seven rights shares for every 11 existing shares held.
Preference shares were sold to the government via Aviation 2020, a new company it owns, for HK$19.5 billion and warrants for HK$1.95 billion, subject to adjustment.
In return Aviation 2020 received two "observers" to attend board meetings.
Healy predicted little optimism for business picking up any time soon, quoting the International Air Transport Association as saying global travel is unlikely to reach pre-pandemic levels until at least 2024.
And he said Asia-Pacific airlines were likely to suffer for longer given spiralling tensions between the US and China.
"With a global recession looming, and geopolitical tensions intensifying, trade will likely come under significant pressure, and this is expected to have a negative impact on both air travel and cargo demand," he said.