Pandemic Deflates Cathay Pacific's Earnings -- WSJ

By P.R. Venkat 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 18, 2020).

Hong Kong's flagship carrier, Cathay Pacific Airways Ltd., said it expects a net loss of about $1.3 billion for the first half of the year after Covid-19 restrictions hammered its business.

Like the rest of the industry, Cathay has been plunged into crisis by the coronavirus pandemic, which has grounded demand for travel and prompted official restrictions to contain the spread of the virus.

The airline unveiled last month a funding package of over $5 billion, with the bulk provided by the Hong Kong government, to help it ride out the downturn.

Cathay said Friday that the expected loss, of about 9.9 billion Hong Kong dollars (US$1.28 billion), would include an impairment charge of HK$2.4 billion, mainly related to 16 aircraft that are unlikely to "re-enter meaningful economic service" before the summer of 2021.

In the same period last year, the airline reported a net profit of HK$1.3 billion.

On average, Cathay flew 900 passengers a day in June. It said that corresponded to less than 1% of the passengers it carried a year ago. Mail and freight carried by Cathay Pacific and sister airline Cathay Dragon fell 43% by weight, compared with June 2019.

"The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe," said Ronald Lam, Cathay's chief customer and commercial officer. He said that while transit passenger numbers had risen slightly, overall, "We are still yet to see any significant signs of immediate improvement."

Cathay plans to increase its flight schedule from 4% of normal levels in June, to as much as 10% in August.

Regional competitor Singapore Airlines Ltd. warned this week of weak financials for the quarter ended in June. In the U.S., Delta Air Lines Inc. reported a $5.7 billion quarterly loss this week and trimmed plans for more summer flights, with cases of Covid-19 surging in the U.S.

Cathay stock fell 1.3% on Friday, taking its year-to-date decline to nearly 40%.

Separately, Swire Pacific Ltd., which holds a 45% stake in Cathay, said the group's own financials would be hit by Cathay's losses. Swire Pacific expects its share of the loss to be about HK$4.5 billion in the first half of 2020.

Write to P.R. Venkat at [e-mail]

(END) Dow Jones Newswires

July 18, 2020 02:47 ET (06:47 GMT)

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