Cathay Pacific is in advanced stages of talks with Boeing to defer deliveries of 21 777-9s. The aircraft are currently scheduled for delivery in 2022 and beyond, following delays to the 777X program. Cathay has already reached agreements with Airbus to push back deliveries and reported a loss of $1.26 billion for the first half of 2020.

Preserving cash short to medium term

Twenty-two years after Cathay Pacific received its first Boeing 777-300, the airline is in progressed talks with to defer deliveries of the 21 777-9s it has on order. The airline's management expressed in the presentation of its interim results that this would help produce cash savings in the short to medium term.

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Cathay Pacific was one of the first carriers to place an order for the Boeing 777X. Its first 777-9 was to arrive this summer; however, the program has faced delays, and deliveries are currently scheduled for 2022 and beyond. There have been reports suggesting that Cathay could convert its orders for the 777-9 and take the 787-10 Dreamliner instead. However, no such mention was made in the interim results presentation.

Cathay Group's management said it would inform the Board at the end of the fourth quarter of 2020 on the optimum shape and size of its fleet going forward. The group's chairman, Patrick Healy, stated that this would inevitably,

"involve rationalization of future planned capacity compared to pre-crisis plans, taking into account the market outlook and cost structure at that time."

Airbus deferral deal is done

Cathay has already reached a deal with Boeing's competitor Airbus to delay the delivery of A350s and A321neos. The widebodies meant to join the fleet in 2020 and 2021 have now been pushed back to 2020-2023, and the neos from 2020-2023 to 2020-2025.

The carrier has a total of 12 A350s on order. Six of them are A350-900s, and six of the longer A350-1000 variety. The A321neos are slated for Cathay's subsidiaries. Sixteen are going to Cathay Dragon, and five to Honk Kong Express, although the latter are subject to operating leases.

Cargo on the up

While passenger traffic has been at a previously unimaginable low, the carrier's widebody 777-300s have still been busy. They have been utilized to ramp up Cathay's cargo operations. Since the end of April, started carrying cargo in their passenger cabins, which increased cargo capacity by 5-9%.

Furthermore, Cathay expects passenger levels to remain at only about 7% of normal levels throughout August and September, but cargo revenues are up and expected to increase. They topped passenger revenue for the first half, accounting for 46% of the group's income. Total revenue for the six months dropped by 48.3%.

Cathay reported a loss of $1.27 billion for the first half of the year and said it does not expect any meaningful recovery in passenger demand for some time. Approximately a third of Cathay's aircraft are transferred to parking locations outside of Hong Kong, including 12 in Alice Springs, Australia.