Cathay burns through up to $352m a month

Cathay Pacific's revenue plunged 48.3 per cent to HK$27.7 billion in the six months ended June 30, 2020.
Cathay Pacific's revenue plunged 48.3 per cent to HK$27.7 billion in the six months ended June 30, 2020.PHOTO: AFP

HONG KONG • Cathay Pacific Airways is still burning through as much as HK$2 billion (S$352 million) a month and will continue to do so until the market recovers from the coronavirus crisis, the carrier said yesterday as it reported dismal August traffic figures 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 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," Mr Lam said.

A HK$39 billion recapitalisation 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 first-half net loss of HK$9.9 billion, is undergoing a strategic review. Recommendations on the future shape and size of the airline group, which includes Cathay Dragon and HK Express, 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 per cent from the same month last year. Revenue passenger km fell 98.1 per cent and passenger load factor dropped 60 percentage points to 19.9 per cent, the company said yesterday.

The group carried 102,122 tonnes of cargo, down 36.7 per cent from August last year. "It is clear that we are facing a long and uncertain road to recovery," Mr Lam said.

With few signs of improvement, bar a pickup on some services thanks to student traffic to the United Kingdom and the lifting of a ban on transit flights from mainland China, Cathay has lowered its operating passenger flight capacity to about 10 per cent for this month and the next.

 
 

"Passenger demand continued to be very weak as new waves of Covid-19 in our key markets dampened overall travel sentiment," Mr Lam said. "With no new destinations being resumed in August, we saw only minimal increase in passenger flight capacity."

Cathay's shares slipped 0.3 per cent in Hong Kong trade yesterday. The stock has tumbled 38 per cent this year.

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A version of this article appeared in the print edition of The Straits Times on September 15, 2020, with the headline 'Cathay burns through up to $352m a month'. Print Edition | Subscribe