Cathay Pacific posts record loss of US$2.79 billion as COVID-19 continues to hammer aviation

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Cathay Pacific Cargo ships 15 million vaccine doses_ENG.PDF
(PHOTO: Cathay Pacific)

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Hong Kong flag carrier Cathay Pacific Airways said on Wednesday (10 March) that it posted a record annual loss of HK$21.65 billion (US$2.79 billion), because of the curtailment of international travel due to the COVID-19 pandemic as well as restructuring costs and fleet write-downs. The 2020 loss compared with 2019 profit of HK$1.69 billion and was worse than an average forecast for a net loss of HK$19.9 billion by 13 analysts, according to Refinitiv. Cathay had previously warned it expected the second-half loss to be “significantly higher” than the record first-half loss of HK$9.87 billion.

Download the Cathay Pacific Annual Report here.

Cathay has been hit with a double whammy of the 2019 anti-government protests that spread to Cathay’s home airport and the Beijing-requested management upheaval were followed by the COVID-19 pandemic.

The airline responded with a government led-rescue and a wholesale restructuring of the business. The airline turned to the government and shareholders in June for a HK$39 billion bailout to avoid going bust. Last October, the carrier jettisoned 5,900 jobs – mostly in Hong Kong – and shut down its regional airline to stem mounting losses which reached as high as HK$3 billion at the height of its pandemic woes.

One bright spot for the airline was its cargo business, according to Chairman Patrick Healy. “Our cargo business was by far the better performer, though it too was affected by the substantial contraction in capacity usually provided by the bellies of our passenger aircraft. Yields increased and revenue improved due to the imbalance in the market between available capacity and demand. We increased cargo capacity by chartering services from our all-cargo subsidiary, Air Hong Kong, operating cargo-only passenger flights and carrying select cargo in the passenger cabins of some of our aircraft, and removing some seats in the Economy Class cabins of four Boeing 777-300ERs to provide further cargo space. Cargo revenue in 2020 was HK$24 billion, an increase of 16.2 percent compared to 2019, reflecting the imbalance in the market between demand and available capacity. Revenue freight tonne kilometre (RFTK) traffic decreased by 26.5 percent, while available freight tonne kilometre (AFTK) capacity decreased by 35.5 percent.”

Healy said the future remained challenging. “We stated at the end of last year that we expected to operate at well below a quarter of pre-pandemic passenger flight capacity in the first half of 2021 with improvement in the second half of the year. This assumed that vaccines would prove to be effective and would be widely adopted in our key markets by summer 2021. Consequently we expected to operate at well below 50 percent passenger capacity overall in 2021. These statements are still largely valid. The correlation between the roll-out of vaccination programmes in our key markets and the potential future relaxation of travel restrictions remains highly uncertain and difficult to predict. We will remain agile and will respond according to the situation as it develops.”

The airline previously reported that its January 2021 traffic figures showed the airline carried a total of 30,410 passengers last month, a decrease of 99 percent compared to January 2020. The month’s revenue passenger kilometres (RPKs) fell 98.7 percent year-on-year. Passenger load factor dropped by 71.4 percentage points to 13.3 percent, while capacity, measured in available seat kilometres (ASKs), decreased by 91.8 percent. The figures “continued to reflect the airline’s substantial capacity reductions in response to significantly reduced demand as well as travel restrictions and quarantine requirements in place in Hong Kong and other markets amid the ongoing global COVID-19 pandemic,” the airline said.

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Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.

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