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Restructure or die, Cathay Pacific warns as it burns through millions a month
CATHAY Pacific Airways Ltd is still burning through as much as HK$2 billion (S$350 million) a month and will continue to do so until the market recovers from the coronavirus crisis, the company said on Monday as it reported dismal August traffic figures and reiterated the need to restructure.
"We are weathering the storm for now, but the fact remains that we simply will not survive unless we adapt our airlines for the new travel market," chief customer and commercial officer Ronald Lam said in a statement.
"A restructuring will therefore be inevitable to protect the company, the Hong Kong aviation hub, and the livelihoods of as many people as possible."
A HK$39 billion recapitalisation plan completed last month brought the company some time, but "it is an investment that we need to repay", he said.
Cathay, which last month reported a first-half net loss of HK$9.9 billion, is undergoing a strategic review. Recommendations about the future shape and size of the airline, which includes Cathay Dragon and HK Express, are due to be presented to the board in the fourth quarter.
Cathay and Cathay Dragon flew only 35,773 passengers in August, a slump of 98.8 per cent from the same month last year. Revenue passenger kilometres fell 98.1 per cent and passenger load factor dropped 60 percentage points to 19.9 per cent, the company said on Monday. The group carried 102,122 tonnes of cargo, down 36.7 per cent from August 2019.
"It is clear that we are facing a long and uncertain road to recovery," Mr Lam said.
With few signs of improvement, bar a pickup on some services thanks to student traffic to the UK and the lifting of a ban on transit flights from mainland China, Cathay has lowered its operating passenger flight capacity down to about 10 per cent in September and October.
"Passenger demand continued to be very weak as new waves of Covid-19 in our key markets dampened overall travel sentiment," Mr Lam said. "With no new destinations being resumed in August, we saw only minimal increase in passenger flight capacity."
Cathay's shares have tumbled 37 per cent this year. BLOOMBERG