Cathay Pacific Expecting Biggest Ever Loss In H2

Cathay Pacific today shared its traffic figures for November 2020. The flag carrier of Hong Kong has low expectations with its financials as 2020 comes to an end. It is set to report far more significant losses for the second half of the year than its record first-half loss.

Cathay Pacific Aircraft
Cathay Pacific is breaking records, but not for the reasons it would have hoped for. Photo: Cathay Pacific

Dire numbers

As the pandemic continues to rock the globe, it’s not a surprise to hear that Cathay is reporting low figures. According to its results, the airline flew a total of 37,815 passengers in November. This number is a reduction of 98.6% when comparing the same period the year before. Moreover, the month’s revenue passenger kilometers (RPKs) fell 97.9% year-on-year.

Cathay Pacific chief customer and commercial officer Ronald Lam spoke about his company’s expectations heading into 2021. Notably, passenger activity is still a fraction of what it was before the pandemic. He said,

“Looking ahead on the passenger front, we still are not seeing significant demand for travel as we head towards the end of 2020 – traditionally a strong travel season in the year. Demand continues to weaken on long-haul routes and we anticipate we will rely more on traffic on regional services in the immediate future. Given the slow speed of recovery, we expect to operate about 9% of pre-COVID-19 capacity in December and slightly above 10% in January 2021.

“The December capacity results in the average capacity for the second half of 2020 being 8.4% of pre-COVID-19 level, compared to the average capacity of 34.3% in the first half. This, together with the additional restructuring and impairment costs announced in October, and further aircraft impairment at year-end, is expected to result in the second-half losses being significantly higher than the first-half losses reported in our interim accounts.”

Cathay Pacific Hong Kong Getty Images
The operator doesn’t have high hopes for the beginning of 2021. Photo: Getty Images

A shift in activity

On average, the airline served only 1,261 passengers per day in November, and load factors remained low at 18.5%, which are both marginal increases over October’s operations. Positive signs were arising when it came to traffic. However, the government soon implemented new quarantine requirements. Additionally, following the reintroduction of health measures across the continents, there was a considerable impact to long-haul routes.

Reuters highlights that Cathay reported a HK$9.87 billion ($1.27 billion) loss in the first half of this year. Meanwhile, analysts predicted a full-year loss of HK$18.3 billion. The previous record annual loss for the airline was amid the global economic crisis of 2008, which saw the airline reported a loss of HK$8.7 billion ($1.12 billion today).

Amid the fall in passenger numbers, there has been a refined focus on cargo operations. There is plenty of activity in the e-commerce realm, and the airline has even started a series of chartered freighter flights to Riyadh, Saudi Arabia. The concentration on these cargo services will continue next year. For instance, the company is launching a seasonal cargo service to Hobart, Australia, this month.

Cathay Pacific, Crew, US Bases
The carrier has had to rethink its approach. Photo: Getty Images

Still fighting

Cathay’s expects that its restructuring plan will cost HK$2.2 billion ($280 million), and crew members still on the books are receiving permanent pay cuts. The firm received a $5 billion rescue in the summer. However, while passenger capacity is expected to remain under 50% next year, the financial challenge continues.

What are your thoughts about Cathay Pacific’s financial results? Do you expect there to be notable improvements next year as the industry seeks to recover? Let us know what you think of the situation in the comment section.