Cathay Pacific shares slump after China cracks down on staff protests

Cathay Pacific shares slump after China cracks down on staff protests

A Cathay Pacific Airways Airbus A350 airplane approaches to land at Changi International Airport in
A Cathay Pacific Airways Airbus A350-900 airplane approaches to land at Changi International Airport in Singapore June 10, 2018. REUTERS/Tim Chong

HONG KONG/BEIJING: Shares in Hong Kong flag carrier Cathay Pacific Airways fell more than 4 per cent in early trade on Monday (Aug 12) to close to a 10-year low, after the airline fired staff in response to demands from China.

China's aviation regulator on Friday demanded the airline suspend personnel who have engaged in and supported illegal protests in Hong Kong from staffing flights into its airspace, citing safety concerns.

The airline moved fast to comply with the demand, suspending a pilot arrested during anti-government protests in Hong Kong and firing two airport employees citing misconduct on Saturday. It also said it would bar "overly radical" staff from crewing flights to the mainland.

READ: Cathay Pacific suspends pilot, fires 2 ground employees over Hong Kong protests

Cathay shares lost 4.37 to HK$9.85 by the break in Hong Kong, with the carrier's parent company Swire Pacific Ltd plunging 5.26 per cent to HK$77.50. 

On Monday morning, shares in the company reached a low of HK$9.82, their lowest since October 2018 and near levels not seen since the 2009 financial crisis.

"Not only is this likely to affect direct China flights, but also flights to Europe and, to a lesser extent, to the US, given that they fly over China airspace," Jefferies analysts said in a note on Sunday.

"We believe near-term headwinds are likely to lead to further downward pressure on the share price."

READ: Tourism in trouble: Hong Kong protests hit economy

Jefferies maintained its "buy" rating on the Hong Kong's flagship carrier, saying the company would remain profitable due to lower costs in the second half.

Source: Reuters/hm

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