Hong Kong's Main Airline Expects $1.3 Billion Loss -- Update
July 17 2020 - 5:29AM
Dow Jones News
By P.R. Venkat
Hong Kong's flagship carrier, Cathay Pacific Airways Ltd., said
it expects a net loss of about $1.3 billion for the first half of
the year after Covid-19 restrictions hammered its business.
Like the rest of the industry, Cathay has been plunged into
crisis by the coronavirus pandemic, which has grounded demand for
travel and prompted official restrictions to contain the spread of
the virus.
The airline unveiled last month a funding package of over $5
billion, with the bulk provided by the Hong Kong government, to
help it ride out the downturn.
Cathay said Friday that the expected loss, of about 9.9 billion
Hong Kong dollars (US$1.28 billion), would include an impairment
charge of HK$2.4 billion, mainly related to 16 aircraft that are
unlikely to "re-enter meaningful economic service" before the
summer of 2021.
In the same period last year, the airline reported a net profit
of HK$1.3 billion.
On average, Cathay flew 900 passengers a day in June. It said
that corresponded to less than 1% of the passengers it carried a
year ago. Mail and freight carried by Cathay Pacific and sister
airline Cathay Dragon fell 43% by weight, compared with June
2019.
"The landscape of international aviation remains incredibly
uncertain with border restrictions and quarantine measures still in
place across the globe," said Ronald Lam, Cathay's chief customer
and commercial officer. He said that while transit passenger
numbers had risen slightly, overall, "We are still yet to see any
significant signs of immediate improvement."
Cathay plans to increase its flight schedule from 4% of normal
levels in June, to as much as 10% in August.
Regional competitor Singapore Airlines Ltd. warned this week of
weak financials for the quarter ended in June. In the U.S., Delta
Air Lines Inc. reported a $5.7 billion quarterly loss this week and
trimmed plans for more summer flights, with cases of Covid-19
surging in the U.S.
Cathay stock fell 1.3% on Friday, taking its year-to-date
decline to nearly 40%.
Separately, Swire Pacific Ltd., which holds a 45% stake in
Cathay, said the group's own financials would be hit by Cathay's
losses. Swire Pacific expects its share of the loss to be about
HK$4.5 billion in the first half of 2020.
Write to P.R. Venkat at venkat.pr@wsj.com
(END) Dow Jones Newswires
July 17, 2020 05:14 ET (09:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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