Cathay Pacific Airways Ltd (國泰航空) is still burning through as much as HK$2 billion (US$258 million) a month and would continue to do so until the market recovers from the COVID-19 pandemic, the company said yesterday as it reported dismal traffic figures for last month and reiterated the need to restructure.
“We are weathering the storm for now, but the fact remains that we simply will not survive unless we adapt our airlines for the new travel market,” chief customer and commercial officer Ronald Lam (林紹波) said in a statement.
“A restructuring will therefore be inevitable to protect the company, the Hong Kong aviation hub, and the livelihoods of as many people as possible,” Lam said.
Photo: AFP
A HK$39 billion recapitalization plan completed last month bought the company some time, but “it is an investment that we need to repay,” he said.
Cathay, which last month reported a net loss of HK$9.9 billion for the first half of this year, is undergoing a strategic review. Recommendations about the shape and size of the airline, which includes Cathay Dragon (國泰港龍) and Hong Kong Express Airways Ltd (香港快運航空), are due to be presented to the board in the fourth quarter.
Cathay and Cathay Dragon flew only 35,773 passengers last month, a slump of 98.8 percent from the same period last year.
Revenue passenger kilometers fell 98.1 percent and passenger load factor dropped 60 percentage points to 19.9 percent, the company said yesterday.
The group carried 102,122 tonnes of cargo, down 36.7 percent from a year earlier.
“It is clear that we are facing a long and uncertain road to recovery,” Lam said.
With few signs of improvement, bar a pickup on some services thanks to student traffic to the UK and the lifting of a ban on transit flights from mainland China, Cathay has lowered its operating passenger flight capacity down to about 10 percent this month and next month.
“Passenger demand continued to be very weak as new waves of COVID-19 in our key markets dampened overall travel sentiment,” Lam said. “With no new destinations being resumed in August, we saw only minimal increase in passenger flight capacity.”
Separately yesterday, a Thailand court approved the restructuring of Thai Airways International PCL, which is billions of US dollars in debt and struggling to survive the COVID-19 tourism crash.
The kingdom, once a majority shareholder in Thai, in May reduced its stake and went to the insolvency court to resolve the airline’s debt — which totaled 332.2 billion baht (US$10.6 billion at the current exchange rate) by the end of June, local media reported.
“The problem that caused debtors’ financial situation is not from its business, but from the rapid change in aviation, particularly the impact from COVID-19,” Bangkok’s Central Bankruptcy Court said yesterday.
It approved Thai Airways’ request for a rehabilitation plan, which would see its debt and company organization restructured.
The airline said after the ruling that it would propose that plan by the end of the year.
Additional reporting by AFP
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