Cathay Pacific flags US$1.3 billion first-half loss as COVID-19 batters travel demand

Cathay Pacific flags US$1.3 billion first-half loss as COVID-19 batters travel demand

Most of Cathay's passenger planes lie unused on Hong Kong airport's tarmac during the
Most of Cathay's passenger planes lie unused on Hong Kong airport's tarmac during the pandemic AFP/Anthony WALLACE

HONG KONG: Hong Kong's Cathay Pacific Airways expects a first-half net loss of HK$9.9 billion (US$1.3 billion), including impairment charges on 16 planes, the airline said on Friday (Jul 17), as the coronavirus pandemic crushed travel demand.

Earlier, the airline had flagged a "substantial" first-half loss and that it had burned through cash of HK$2.5 billion to HK$3 billion each month since February.

The estimated first-half loss would be Cathay's biggest half-yearly loss in at least a decade and compares to a HK$1.35 billion profit in the first half of 2019, before widespread protests in Hong Kong and the COVID-19 outbreak decimated demand.

"The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe," Cathay chief customer and commercial officer Ronald Lam said in a statement.

READ: Cathay Pacific to lay off overseas cabin crew, furlough pilots

The airline, which last month received a US$5 billion rescue package led by the Hong Kong government, said it planned to operate 7 per cent of normal passenger capacity in July, rising to around 10 per cent in August.

It will take a HK$2.4 billion impairment charge alongside its half-year results that mainly relates to 16 planes that are unlikely to re-enter meaningful service before the 2021 summer season, the company said.

Before the Friday announcement, Cathay was expected to post a HK$12.6 billion full-year loss in 2020, according to the average forecast of 13 analysts polled by Refinitiv.

The airline said it would make tough decisions by the fourth quarter after reviewing all aspects of its business model, including aircraft orders.

It has accepted government employment subsidies that prevent it from cutting Hong Kong-based staff through August.

READ: Commentary - Airlines will need to review their fleets to boost passenger confidence and demand

Cathay said this month it was evaluating whether to send some of its aircraft to less humid locations for storage as it reviews the size of its fleet in light of the fall in demand.

The airline is due to release its first-half results on Aug 12.

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Source: Reuters/aj

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