Cathay Pacific sees the H2 loss “considerably greater” than within the first half of Reuters
© Reuters. FILE PHOTO: A Cathay Pacific plane is seen in front of the air traffic control tower at Hong Kong International Airport in Hong Kong
SYDNEY (Reuters) – Hong Kong-based Cathay Pacific Airways (OTC 🙂 Ltd expects a “significantly higher” loss in the second half than the record loss in the first half due to low demand, restructuring costs and depreciation of its aircraft fleet on Wednesday.
The airline posted a loss of HKD 9.87 billion (US $ 1.27 billion) in the first half of the year due to the pandemic. Before the announcement, analysts had forecast an average annual loss of HKD 18.3 billion, according to 13 companies surveyed by Refinitiv.
The previous record annual loss in 2008 during the global financial crisis was HKD 8.7 billion.
“We are still not seeing any significant improvement in our passenger business,” said Ronald Lam, Cathay’s chief customer and commercial officer, in a statement.
The airline reported a 98.6% drop in passenger numbers in November, while freight traffic fell 26.2%.
“Given the slow recovery, we expect to have around 9% of capacity in December before COVID-19 and just over 10% of capacity in January 2021,” said Lam of the passenger business.
Cathay said in October it would cut 5,900 jobs to help weather the pandemic, including almost all jobs at its regional airline Cathay Dragon, which it has closed.
As part of the restructuring plan, which is expected to cost HKD 2.2 billion, the remaining pilots and flight attendants signed new contracts that resulted in permanent wage cuts.
The airline expects to serve less than 50% of its normal passenger capacity due to border closings in 2021. Below 25% operation is planned for the first half of the year, but a possible recovery is forecast for the second half of the year as COVID-19 vaccines roll out on a larger scale.
To bolster the balance sheet in the meantime, Cathay received a $ 5 billion bailout in June led by the Hong Kong government.
($ 1 = 7.7525 Hong Kong dollars)
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