Hong Kong carrier Cathay Pacific Airways Ltd (國泰航空) yesterday issued a profit warning, estimating it would have a historic loss of HK$9.9 billion (US$1.3 billion) in the first half of this year as it reels from the COVID-19 pandemic.
“The Group will record a net loss attributable to shareholders of approximately HK$9.9 billion, which compares to a net profit to shareholders of HK$1.3 billion for the same period in 2019,” the airline said in a statement.
Like airlines worldwide, Cathay has been battered by the evaporation of global travel during the pandemic, but the carrier is especially vulnerable because it has no domestic market to fall back on.
Photo: AFP
In a stark illustration of the travel collapse, Cathay said last month’s passenger numbers were down 99.1 percent year-on-year.
“The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe,” chief customer and commercial officer Ronald Lam (林紹波) said in the statement.
He added there was a slight increase in the number of transit passengers following the easing of restrictions at Hong Kong’s airport, but they are “yet to see any significant signs of immediate improvement.”
The airline also said 16 aircraft are “unlikely” to operate until summer next year, causing impairment charges amounting to about HK$2.4 billion.
On the cargo front, the carrier said there were fewer cargo-only passenger flights compared with May. Its cargo tonnage fell five percent month-on-month as demand for medical supplies waned following a peak month in May.
Hong Kong’s government came to the rescue of Cathay earlier this year with a HK$39 billion recapitalization plan.
Cathay chairman Patrick Healy had described the bailout as the only way to save the airline from collapse.
Shareholders on Monday approved the proposal.
Under the plan, Cathay would raise about HK$11.7 billion in a rights issue on the basis of seven rights shares for every 11 existing shares held, while preference shares would be sold to the government through Aviation 2020 Ltd for HK$19.5 billion and warrants for HK$1.95 billion, subject to adjustment.
Aviation 2020 would also have two “observers” to attend board meetings.
Lam said Cathay has adjusted its overall capacity for this month to approximately 7 percent and the airline hopes to operate up to 10 percent of its normal flight schedule next month.
Earlier this week, Akbar Al Baker, the chief executive officer of Qatar Airways Ltd, one of Cathay’s biggest shareholders, told Bloomberg Television he was confident the airline would overcome the crisis.
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