Cathay Pacific First-half Loss Hits Almost HK$10b

Hong Kong's flag carrier, Cathay Pacific, has posted a loss of HK$9.87 billion in the first half of 2020 as the global aviation industry was devastated by the Covid-19 pandemic.

"The first six months of 2020 were the most challenging that the Cathay Pacific Group has faced in its more than 70-year history," chairman Patrick Healy said in a statement announcing the results.

"The global health crisis has decimated the travel industry and the future remains highly uncertain, with most analysts suggesting that it will take years to recover to pre-crisis levels," he added.

The loss was in line with the HK$9.9 billion forecast Cathay had flagged last month and included HK$2.47 billion of impairment charges.

Revenue in the six months ending June plunged 48.3 percent to HK$27.7 billion, though Cathay added more cargo-only flights as freight yields rose 44.1 percent.

Like airlines worldwide, Cathay has been battered by the evaporation of global travel during the pandemic.

The firm said it carried 4.4 million passengers in the period under review – a 76 percent plunge on-year – as the pandemic burst out of central China and then spread around the world.

At the height of the global lockdowns in April and May, its entire fleet was averaging just 500 passengers a day.

The Hong Kong government came to the rescue of Cathay earlier this year with a HK$39 billion recapitalisation plan, allowing the airline to raise some HK$11.7 billion in a rights issue on the basis of seven rights shares for every 11 existing shares held.

Preference shares were sold to the government via Aviation 2020, a new company it owns, for HK$19.5 billion and warrants for HK$1.95 billion, subject to adjustment. In return, Aviation 2020 received two observers to attend board meetings.

Healy predicted little optimism for business picking up any time soon, quoting the International Air Transport Association as saying global travel is unlikely to reach pre-pandemic levels until at least 2024.

And he said Asia-Pacific airlines were likely to stay hit for longer given spiralling tensions between China and the United States, the world's two biggest economies.

"With a global recession looming, and geopolitical tensions intensifying, trade will likely come under significant pressure, and this is expected to have a negative impact on both air travel and cargo demand," he said.

The company is not offering an interim dividend.

It's the second time in three years Cathay has plunged into the red in the first half. For the first six months of 2019, the carrier reported an attributable profit of HK$1.3 billion. The year before, Cathay posted an attributable loss of HK$263 million. (Reuters/AFP)

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