The carrier releases its 1H results with a net loss of RM6b as the pandemic brought travel to a near standstill
HONG KONG • Cathay Pacific Airways Ltd shares climbed the most in nearly 12 years after a Chinese state-run newspaper tweeted that Hong Kong’s airport may restart transfer flights to mainland China, a move that could inject the beleaguered carrier with some much-needed passenger traffic.
The tweet from the Global Times added fuel to Cathay’s yesterday morning rally, pushing it to a 12% gain, its biggest since October 2008. Shares closed at HK$5.88 in Hong Kong. The newspaper cited a source it didn’t identify, and Hong Kong International Airport didn’t immediately respond to a request for comment.
At a media briefing later, Cathay chief customer and commercial officer Ronald Lam said the company, which typically relies on mainland traffic for a large portion of revenue, hadn’t heard any official news on reopening Hong Kong for transfer flights.
Meanwhile, chairman Patrick Healy reiterated that the coronavirus pandemic has been the most challenging period in the airline’s history.
Cathay released first-half (1H) results during the midday trading break, showing a 1H net loss of HK$9.9 billion (RM5.94 billion) as the pandemic brought travel to a near standstill. That news was already priced in, with Cathay first warning about the loss last month.
The airline and its Cathay Dragon unit flew only 4.4 million passengers in the first six months, down from 18.3 million a year earlier. Passenger revenue tumbled 72% to HK$10.4 billion during the period.
The company flew an average of just 500 passengers a day in April and May. Hong Kong Express, which Cathay bought in July 2019, suspended services in March and only began resuming a limited number of flights this month.
The 1H loss included impairment charges of HK$2.5 billion relating primarily to 16 aircraft unlikely to return to meaningful economic service again.
Cathay said it agreed with Airbus SE to defer deliveries of A350s and A321neos until possibly 2025, and it is in “advanced negotiations” with Boeing Co for the deferral of B777-9 wide-bodies.
Covid-19 struck just as Cathay was trying to rebuild following protests in Hong Kong that led to changes in senior management and a sharp drop in traffic last year. The pandemic made matters much graver for Cathay and airlines elsewhere, many of which are relying on government aid to survive. Several have collapsed.
Cathay unveiled a HK$39 billion rescue plan in June that gives the Hong Kong government a 6.08% stake in the company and two observers on its board. The recapitalisation was completed yesterday. The carrier’s main shareholders are Swire Pacific Ltd, Air China Ltd and Qatar Airways.
The airline was losing HK$2.5 billion to HK$3 billion per month from February to April, and it took several steps to reduce costs, including cutting salaries, introducing unpaid leave programmes for staff and closing crew bases overseas.
Those cost control measures still aren’t sufficient, and a group restructuring will be necessary. A review of the shape and size of the company will be presented to the board by the fourth quarter, Healy said, without ruling out job cuts. — Bloomberg