Cathay 'cautiously optimistic' about cargo, but expects 'substantial loss' in H1 2020

HONG Kong's flag carrier Cathay Pacific says that its cargo business, despite facing headwinds, has managed to maintain its cargo capacity intact

12 March 2020 - 19:00

HONG Kong's flag carrier Cathay Pacific says that its cargo business, despite facing headwinds, has managed to maintain its cargo capacity intact.

'We are cautiously optimistic about cargo following the recent reduction in US-China trade tensions,' said chairman of Cathay Pacific, Patrick Healy, while commenting about prospects in 2020.

He said that although cargo demand was depressed in 2019, it did pick up later in the year during the traditional high season, 'reflecting new consumer product, specialist airfreight shipments and restocking ahead of holiday periods.

'Exports from Mainland China and Hong Kong to trans-Pacific and European markets were encouraging later in the year. Nevertheless, the cargo business performed significantly below expectations in 2019,' Mr Healy added.

To boost the competitiveness of Hong Kong International Airport (HKIA) as a global cargo hub, Mr Healy referred to the announcement in December that Cathay together with the Airport Authority of Hong Kong are to introduce a new terminal charge concession, ranging from 18 per cent to 20 per cent compared to current levels, to come into effect next month. The new charges will apply to air shipments from Hong Kong on all four of Cathay's airlines.

Cathay Pacific reported that net profit fell 28 per cent in 2019 to HKD1.69 billion (US$217.7 million). Profits in the second half of the year fell to HKD344 million, from HKD2.6 billion a year ago as Hong Kong's long-running political crisis hit demand. Revenue was HKD106.97 billion, down 3.7 per cent.

Mr Healy pointed out that the outbreak of the coronavirus is causing widespread disruption, on top of what was already a very challenging environment.

'After a promising start in early January, we experienced our most challenging Chinese New Year period ever. Demand dropped dramatically and cancellations of bookings have continued since then as governments as well as companies around the world impose travel restrictions of various kinds, and as individuals themselves choose not to travel.

'The scale of the challenge we currently face is unprecedented. The outlook is very uncertain. Having said that, we remain confident in the future of Cathay Pacific.'

The group chairman added: 'No one can predict when these conditions will improve. I already gave you our planned capacity and frequency cuts for March and April. In addition, I can tell you that, as at the end of February, passenger load factor declined to approximately 50 per cent, and year-on-year yield has also fallen significantly.

'We don't yet have planned capacity cuts available for May but obviously we need to remain agile as we continue to monitor and match market demand. Nevertheless, it is inevitable that despite all the measures I have just outlined, we will incur a substantial loss in the first half of this year.'


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