Cathay Pacific records $9.87b loss for H1

The airlines’ passenger business does not expect to make a recovery for some time.

Hong Kong-listed Cathay Pacific registered a record loss of $9.87b for the first six months of the year—more than 11,200% lower than the $1.35b net profit for H1 2019, the airline company’s latest results showed. Revenue dropped 48.3% YoY to $27.67b over the same period.

The airline company said that it does not expect to make a recovery for some time.

“This is the biggest challenge to the aviation industry that Cathay Pacific has ever witnessed,” Cathay Pacific Airways stated in its interim results report for 2020, referring to the ongoing COVID-19 pandemic. “We do not expect to see a meaningful recovery in our passenger business for some time to come.”

Also Read: Cathay Pacific warns of $9.9b H1 net loss

The International Air Transport Association (IATA) forecasted that global airline revenue will decline 61% in 2020 and that airline demand will only return to pre-crisis levels by 2024.

Already, Cathay Pacific’s passenger revenue decreased by 72.2% to $10.4b in the first half of 2020. RPK traffic also contracted by 72.6%. This loss of revenue reflects the precipitous drop in passenger demand resulting from the extensive travel restrictions, border controls and quarantine arrangements which were implemented around the world in response to the COVID-19 pandemic, they noted.

In total, the company carried 4.4 million passengers in the first six months of the year, 76% fewer than in 2019. In April and May, the airline company said that it was carrying only around 500 passengers per day.

Meanwhile, cargo revenue hit $11.18b in H1 2020 or 8.8% higher compared to the same period in 2019. However, capacity decreased by 31%, due to considerable loss of available capacity on the back of extensive cuts to their passenger schedule. Typically, approximately half of Cathay Pacific’s cargo is carried along with their passenger aircraft.

As a result, overall tonnage carried shrunk by 31.9% to 667 thousand tonnes.

The drop in oil prices also had limited effect on the company’s margins, according to Cathay Pacific, since the airlines flew much less. It was also offset by losses on fixed volume hedge funds.

Contribution from our subsidiaries was also generally weaker. This was partly blamed to an impairment of the asset carrying values of Vogue Laundry Service and Cathay Pacific Catering Services.

HK Express reported a significant loss for the first half of 2020, has only recently reintroduced some flights after temporarily suspending all flights in March.

Meanwhile, Air Hong Kong was noted to have recorded a profit during the first six months of the year. It had providing additional cargo capacity to Cathay Pacific to meet the imbalance between capacity and demand.