Cathay Pacific is heading for a record-loss over 2020, expecting a net loss that will be “significantly higher” than that announced for the first six months, it said in a trading update on December 16. For the January to June-period, Cathay and subsidiary Cathay Dragon were HK$9.87 billion in the red. So expect the full-year loss to be at least HK$20 and 25 billion.
The Hong Kong-based airline is in the deepest crisis ever. A year ago, its traffic suffered from rising political unrest in Hong Kong, followed early this year by the lockdown of air traffic in the Asian Pacific region after the first wave of Covid-19 in and around China.
As Covid became a pandemic, it impacted Cathay’s long-haul traffic around the world, forcing the airline to ground most of its fleet. At the same time, political tensions continued between Beijing and Hong Kong.
While Cathay Pacific has recommenced some passenger services in recent months, its latest November figures confirm the difficult situation. At just 37.815, passenger numbers were down -98.6 percent compared to last year and capacity by -90.9 percent. That’s just 1.261 passengers per day with a load factor of 18.5 percent. Between January and November, passenger numbers were down -85.8 percent.
Brief recovery in the Asia-Pacific region
Cathay has seen some strong recovery from Australia and Canada, but traffic collapsed again after the government imposed new quarantine measures for incoming travelers. Positive demand has been witnessed on routes to Indonesia and Japan, especially to Osaka. Hopes were high for the air travel bubble between Hong Kong and Singapore, but this was postponed after rising Covid-cases. Traffic to Europe and the US remains very weak.
Cargo on both full freighters and converted passenger aircraft received a boost of 9 percent to 77.7 percent in November, thanks to strong e-commerce, but the actual tonnes carried were still down -34.3 percent compared to the same month last year.
Cathay Pacific expects to operate at slightly over 10 percent capacity in January, compared to 9 percent in December which traditionally has been one of the strongest seasons. HY2 has seen average traffic of 8.4 percent compared to 34.4 percent in HY1. CEO Richard Lam repeated there is no sign of significant demand for travel. “Demand continues to weaken on long-haul routes and we anticipate we will rely more on traffic on regional services in the immediate future.”
The additional impairment and restructuring costs needed during the second half-year have pushed losses up to a new high. The highest loss Cathay Pacific recorded was an HK$ -8.7 billion full-year loss in 2008. Cathay didn’t provide updates on its current liquidity position. It completed a HK$ 39 billion recapitalization plan in August. The restructuring has included the immediate termination of Cathay Dragon, which has been integrated within the parent airline.