Sat, Oct 19, 2019 - Page 10 News List

Cathay Pacific cuts earnings outlook on HK protests


Cathay Pacific Airways Ltd (國泰航空) has cut its earnings outlook after passenger traffic fell for a second consecutive month, as protests that have put intense pressure on the carrier continued to disrupt travel and business in Hong Kong.

Second-half financial results would be lower than those of the first half, the Hong Kong airline said in a statement yesterday, reversing its previous forecasts.

Cathay also reported a second straight monthly drop in the number of passengers carried and warned of a “significant” decline in inbound bookings for the rest of this year, especially from China and other Asian markets.

“Our expectation is that rest of 2019 will remain incredibly challenging for the airline,” Cathay Pacific chief customer and commercial officer Ronald Lam (林紹波) said in the statement.

“The mainland China market has been hit especially hard,” he said.

“Intense competition together with an increasing reliance on transit passengers over the short term has continued to apply additional pressure on yield,” he added.

The comments underscore the latest setback for an airline buffeted by the protests in Hong Kong.

Chinese regulators clamped down on Cathay Pacific after some employees took part in demonstrations, and the company’s decision to subsequently fire staff and warn workers about supporting the pro-democracy movement angered activists.

The airline appointed a new chief executive and chairman after their predecessors resigned amid the unrest.

“The status quo for Cathay has changed forever after the protests,” aviation consulting firm Endau Analytics founder Shukor Yusof said.

“The question now is about their survival. The Chinese will want to send a very clear message,” he said.

Unrest in Hong Kong has led to a slump in visitors, particularly from China, which accounts for the bulk of tourists.

They are especially wary due to a perception they could be targeted in the protests, which state media frame as being driven by violent extremists.

Demonstrations spread to the airport at times, crippling operations there and causing hundreds of flight cancelations.

The company in August said that second-half earnings would be better than those of the first six months, but then it reported passenger traffic tumbled 11 percent, the most in a decade, in August and 7.1 percent last month.

Cathay Pacific filled less than 74 percent of its seats last month, the lowest level since 2008, data compiled by Bloomberg showed.

On one flight in the middle of last month bound for Beijing from Hong Kong — once a popular route for the airline — most seats in economy class were empty, with passengers able to take up entire rows by themselves.

Perhaps more importantly, some business travelers who typically fly in premium seats have been ordered to shun Cathay Pacific.

Some Chinese state-run companies have banned their employees from booking flights on Cathay Pacific, people familiar with the matter said.

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