Cathay Pacific cuts earnings outlook as travellers avoid HK

Hong Kong's Cathay Pacific Airways yesterday lowered its expectations for full-year profit due to "incredibly challenging" conditions in its home market, racked by anti-government protests that it expected to persist for the rest of this year.

The airline reported a 7.1 per cent drop in passenger numbers last month as travellers avoided Hong Kong due to widespread and sometimes violent protests.

It added that its financial results for the second half of this year were likely to be below those of the first half.

Cathay, which is trying to complete a three-year financial turnaround plan, has become the biggest corporate casualty of the Hong Kong protests after China demanded it suspend staff involved in, or supporting, the demonstrations that have plunged the former British colony into a political crisis.

The airline in August reported a first-half profit of HK$1.35 billion (S$235 million). At that time, Cathay said second-half profit was likely to be higher than that of the first half, as is typically the case for the airline, based on seasonality.

The consensus estimate before yesterday's update was for the airline to report a full-year profit of HK$3.2 billion, according to 11 analysts polled by Refinitiv, although some last month had predicted a poor second half.

Cathay shares ended 2.16 per cent lower yesterday.

"We continue to see a significant shortfall in inbound bookings for the remainder of 2019 as compared with the same snapshot last year," Cathay chief customer and commercial officer Ronald Lam said in a statement yesterday.

Cathay last month said it would cut capacity for the upcoming winter season.

Inbound traffic to Hong Kong was down 38 per cent last month, unchanged from August, with demand from the mainland Chinese market hit especially hard, the airline said.

The 7.1 per cent fall in passenger numbers last month was better than the 11.3 per cent drop in August, but Cathay said an increasing reliance on transit passengers had affected its yields - a measure of the average fare paid per kilometre per passenger.

It also said cargo volumes fell 4.4 per cent last month, but that there were signs of improvement as it headed into air freight's traditional high-demand season.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 19, 2019, with the headline 'Cathay Pacific cuts earnings outlook as travellers avoid HK'. Print Edition | Subscribe