You are here

Cathay Pacific warns of HK$9.9b first-half net loss

In April, Cathay was flying as few as 458 passengers a day on average. That number increased to 900 a day in June.

Hong Kong

CATHAY Pacific Airways Ltd warned that it is set to post a first-half net loss of about HK$9.9 billion (S$1.77 billion) as the coronavirus pandemic roils air travel, with the Hong Kong carrier last month flying less than one per cent of its usual number of passengers.

Passenger load factor for the airline and its Cathay Dragon unit was just 27.3 per cent in June, the carrier said on Friday in a statement. International aviation remains "incredibly uncertain" because of virus-related border restrictions, chief customer and commercial officer Ronald Lam said in the release. Cathay flew 27,106 passengers last month, down 99.1 per cent from June 2019.

"Although we have begun to see some initial developments, notably a slight increase in the number of transit passengers following the easing of transit restrictions through Hong Kong International Airport, we are still yet to see any significant signs of immediate improvement," Mr Lam said.

The virus has dealt a crushing blow to Cathay and other airlines worldwide, resulting in job losses and bankruptcies. In April, Cathay was flying as few as 458 passengers a day on average. That number increased to 900 a day in June.

Your feedback is important to us

Tell us what you think. Email us at

With its finances and prospects looking increasingly strained, Cathay last month proposed a HK$39 billion government-backed rescue plan that was approved by shareholders on Monday.

The Hong Kong government gets a 6.08 per cent stake in Cathay through an entity called Aviation 2020 and has placed two observers - Carlson Tong and Rimsky Yuen - on the airline's board.

The rescue included a rights issue of seven shares for every 11 held, at a subscription price of HK$4.68 apiece. Cathay shares hit HK$5.9 on July 15, their lowest since September 2001.

On Friday, Cathay was down 1.5 per cent at HK$6.02 as at 1:49 pm in Hong Kong. While the fund-raising plan helps Cathay stave off collapse, a fresh wave of virus cases in Hong Kong and stricter social-distancing measures in the city have added more uncertainty to its outlook.

Cathay has been hit particularly hard by Covid-19 as it has no domestic market to fall back on, and it was already in financial trouble as protests in Hong Kong put off visitors and prompted a change in management at the airline last year.

"Demand continued to be very weak in June with our airlines carrying less than one per cent of the passengers we carried in the same month in 2019," Mr Lam said.

Cathay expects to operate up to 10 per cent of its normal flight schedule in August and will "continue to assess the potential of increasing more flights and adding destinations" in the coming months, Mr Lam said. July capacity is about 7 per cent of usual levels.

The expected first-half net loss, which compares with net income of HK$1.3 billion a year earlier, includes impairment charges of about HK$2.4 billion, mainly relating to 16 aircraft that are unlikely to re-enter "meaningful economic service" before the 2021 summer season, the airline said.

On the cargo front, Cathay and Cathay Dragon carried 93,228 tonnes of cargo and mail in June, down 43 per cent from a year earlier, even as they operated a full freighter schedule along with chartered flights from subsidiary Air Hong Kong. There were fewer cargo-only passenger flights.

"Cargo tonnage fell by 5 per cent month-on-month as demand for medical supplies waned following a peak month in May," Mr Lam said.

"The reduction of long-haul carriage from the Chinese mainland and Hong Kong made way for movements from South-east Asia and the Indian sub-continent as local lockdown measures eased." Earlier this week, Akbar Al Baker, the chief executive officer of Qatar Airways, one of Cathay's biggest shareholders, told Bloomberg Television he was confident the airline would overcome the crisis.

Analysts at Daiwa Capital Markets Hong Kong Ltd. upgraded Cathay to hold from sell on Thursday, saying the worst was over for the shares after they'd slumped more than 20% since the rescue plan was announced on June 9. BLOOMBERG

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to