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Cathay Pacific Issues Profit Warning on $1.3 Billion First Half Loss

Cathay Pacific Issues Profit Warning on $1.3 Billion First Half Loss

Cathay Pacific estimates it will post a loss of as much as HK$9.9 billion (USD $1.3 billion) for the first six months of 2020, prompting the Hong Kong-based airline to issue a profit warning. The “substantial” loss includes impairment charges of HK$2.4 billion for 16 aircraft that will remain grounded until at least the 2021 summer season.

“The one certainty facing the global aviation industry is that the landscape will be significantly changed when international air travel recovers,” Cathay Pacific’s chief customer and commercial officer, Ronald Lam said of the news on Friday.

Photo Credit: Cathay Pacific
Photo Credit: Cathay Pacific

“The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe,” Lam continued.

“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.”

Cathay Pacific and its regional subsidiary Cathay Dragon carried just 27,106 passengers last month – down 99.1 per cent on passenger numbers in June 2019. Overall load factor stood at just 27.3 per cent, while capacity was 96.1 per cent lower than the same month in 2019.

Transit passenger traffic has picked up slightly after Hong Kong slightly eased travel restrictions but remains significantly down from pre-Corona levels. Notable demand has been seen for passengers travelling from South Asian countries like the Philippines and Vietnam to North America.

Cathay Pacific received a $5 billion government-backed bailout last month and the airline says it is pushing ahead with a “comprehensive review” of the company’s operations. Mass redundancies have not been ruled, although the airline is currently managing surplus staff numbers through voluntary unpaid leaves of absence.

Payroll support from the Hong Kong government will keep jobs safe until at least the end of August.

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