Cathay Pacific posts record $3.76b loss for pandemic-hit 2020, focuses on preserving cash

The airline in January issued HK$6.74 billion of convertible bonds to shore up liquidity. PHOTO: AFP

HONG KONG (REUTERS) - Hong Kong's Cathay Pacific Airways said on Wednesday (March 10) it was focused on preserving cash after it posted a record annual loss of HK$21.65 billion (S$3.76 billion), caused by the Covid-19 travel downturn, restructuring costs and fleet write-down.

The 2020 loss compared with 2019 profit of HK$1.69 billion was worse than an average forecast for a net loss of HK$19.9 billion by 13 analysts, according to Refinitiv.

"Market conditions remain challenging and dynamic," Cathay chairman Patrick Healy said in a statement. "All our cash preservation measures will continue unabated. Executive pay cuts will remain in place throughout 2021."

Cathay lacks a domestic market at a time when international borders are largely closed because of the coronavirus pandemic. Last December, Cathay's passenger numbers fell by 98.7 per cent compared with a year earlier, though cargo carriage was down by a smaller 32.3 per cent.

Nearly 60 per cent of its 2020 revenue of HK$47.9 billion was from its cargo operations, up from around 20 per cent in 2019.

The airline said in January it would cut passenger capacity by 60 per cent and cargo capacity by 25 per cent as a result of new rules that required crew to quarantine for two weeks in hotels before returning to normal life in Hong Kong that took effect on Feb 20.

As a result, Cathay has put most crew on voluntary rosters of three weeks flying, two weeks in a hotel and two weeks off at home.

Cathay said the quarantine rules would increase cash burn by about HK$300 million to HK$400 million per month, on top of earlier HK$1 billion to HK$1.5 billion levels.

The airline in January issued HK$6.74 billion of convertible bonds to shore up liquidity.

Cathay in October last year said it would cut 5,900 jobs to help it weather the pandemic, including nearly all of the positions at its regional airline Cathay Dragon, which it shut down.

Bocom International analyst Luya You said the prospect of further job cuts was rising, as a slower-than-expected vaccine roll-out in key markets dimmed the outlook for the second half of 2021.

"As in 2020, we expect Cathay to make decisions regarding any further cuts to come in the second quarter once the second-half outlook becomes clearer," she said.

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