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Cathay Pacific warns of slow start for cargo in 2020

CATHAY Pacific Group chief customer and commercial officer Ronald Lam has warned that the airline's cargo sector is expecting a weak start to next year, but noted that the air carrier was 'cautiously optimistic' for the whole of 2020

18 December 2019 - 19:00
CATHAY Pacific Group chief customer and commercial officer Ronald Lam has warned that the airline's cargo sector is expecting a weak start to next year, but noted that the air carrier was 'cautiously optimistic' for the whole of 2020.

The Hong Kong hubbed airline said that its cargo performance continues to come under pressure and this is expected to continue next year.



Last month, Cathay Pacific and Dragon Air carried 177,964 tonnes of cargo, a drop of 3.9 per cent compared with a year earlier.



The cargo and mail load factor fell by 1.5 percentage points to 68.6 per cent. Capacity, measured in available freight tonne kilometres (AFTKs), was down 3.8 per cent while cargo and mail revenue freight tonne kilometres (RFTKs) dropped by 5.8 per cent.



In the first eleven months of 2019, the tonnage fell by 6.4 per cent against no change in capacity and a 6.8 per cent decrease in RFTKs, as compared to the same period for 2018.



Commenting on the November's cargo statistics, Mr Lam said: ''While our cargo performance this year remains significantly below the record levels seen in 2018, we are cautiously optimistic about 2020 despite anticipating a weak first half.'



However, he noted that both load factor and yield further improved against the previous month in November, which is traditionally a peak month of the year.



'Exports from mainland China, Hong Kong and Taiwan remained robust. As demand from traditional retail and new product releases tailed off towards the latter half of the month, strong e-commerce traffic surged around the Singles' Day shopping holiday in mainland China as well as Black Friday, to which we successfully catered with additional charter requests to Southeast Asia.'



Mr Lam emphasised that the introduction in April 1 next year of the new Terminal Charge concession for export shipments from Hong Kong, will help boost competitiveness and 'make Cathay Pacific and Hong Kong an even more compelling choice for our cargo customers'.



There was also a 9.0 per cent year-on-year drop in November's passenger volume to 2,623,764. Passenger load factor decreased by 3.2 percentage points to 80.1 per cent, while capacity, measured in available seat kilometres (ASKs), decreased by 1.5 per cent.



In the first eleven months of 2019, the number of passengers carried dropped by 0.4 per cent and capacity increased by 5.7 per cent, as compared to the same period for 2018.



'As with the past few months, November continued to be very challenging for both Cathay Pacific and Hong Kong, with sentiment for travel still weak. In November, our inbound Hong Kong traffic dropped 46 per cent compared to the same period in 2018 - a further slowdown from the 35 per cent drop seen in October.'



Looking ahead, Mr Lam said the airline contined to see a significant shortfall in inbound Hong Kong advance bookings, particularly from mainland China and other regional markets, as compared to the same snapshot last year. This shortfall has been partially offset by the improvement of transit passenger traffic.



'Overall, our expectation is that the rest of 2019 will remain incredibly challenging and we continue to expect our second-half financial results to be significantly below those of our first half.



'In light of the immediate commercial challenges we are facing, we have reluctantly made the decision to reduce our seat capacity in 2020 by 1.4 per cent year on year as opposed to our original plan of 3.1 per cent growth, meaning that for the first time in a long while our airlines will reduce in size.'


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