Cathay posts record 2020 loss of US$2.8b with positive cargo revenues

HONG Kong's flag carrier Cathay Pacific has reported record losses of HKD21

12 March 2021 - 15:57
HONG Kong's flag carrier Cathay Pacific has reported record losses of HKD21.6 billion (US$2.8 billion) in 2020, a year blighted by the Covid-19 pandemic - the worst crisis in commercial aviation history.

The Hong Kong flag carrier's annual financial performance sank even lower than predicted, as it posted one of the biggest losses for a city-listed company since the public health crisis emerged more than a year ago. Last year the airlines posted a profit of HKD1.69 billion.

Losses in the second half of 2020 increased to HKD11.8 billion, up from a loss of HKD9.9 billion in the first six months of the year, with larger-than-expected restructuring charges and a reduction in the value of assets such as aircraft piling pressure on the business.

Analysts were expecting an annual HK$20.4 billion loss, according to those surveyed by Bloomberg ahead of the announcement.

Cathay chairman Patrick Healy described the past 12 months as 'the most challenging' in the airline group's 70-year history, and warned of an uncertain future.

'Market conditions remain challenging and dynamic,' he said in a statement. 'It is by no means clear how the pandemic and its impact will develop over the coming months.' He added: 'All our cash preservation measures will continue unabated.'

Only its air freight operations saved the company from recording even deeper losses, as prices soared due to the high demand for shipments and fewer planes flying during the pandemic.

'Cargo, on the other hand, performed very well, delivering record revenues of HKD24.6 billion, an increase of 16.2 per cent versus 2019, in a year when our capacity was down by more than 35 per cent', the chairman said.

'This was a reflection not only of the imbalance in the market between demand and available capacity, but also of the extraordinary work of our people to secure revenue wherever possible in incredibly dynamic market conditions.'

Mr Healy said the airline took numerous steps to add capacity, including operating 5,648 cargo-only passenger flights, chartering 680 freighter flights from our all-cargo subsidiary, Air Hong Kong, as well as loading cargo in the cabins of some passenger aircraft.

'We also converted four of our passenger aircraft to allow for more cargo capacity by removing seats. In 2020 overall, load factors increased by 8.9 percentage points compared to 2019 to 73.3 per cent, and yields were up by 58.3 per cent.'

On passenger business, the airline carried just over 13 per cent of the passengers it carried in 2019. Capacity was down 78.8 per cent compared to the previous year and revenue passenger kilometres (RPKs) decreased 85.1 per cent. Load factors averaged just 58 per cent, a drop of 24.3 percentage points compared with 2019, and reached a low of 18.2 per cent in October. Yields were up 4.8 per cent to 56.3 cents.

Looking ahead, Mr Healy reaffirmed his belief in a vaccine-led recovery but warned the 'correlation' of vaccinations and the relaxation of travel restrictions remained 'highly uncertain and difficult to predict'.

'Our short-term outlook continues to be challenging. However, we remain absolutely confident in the long-term future and competitive position of our airlines, as we recover and rebuild from the impact of Covid-19,' the chairman added.

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