Cathay Pacific Issues Profit Warning With Passenger Numbers Down 99%

Cathay Pacific Group, home to airlines Cathay Pacific and Cathay Dragon, expects to incur a massive loss for the first half of 2020. A profit warning released on Friday reveals that passenger numbers for the airlines dropped 99% in June compared to the same period in 2019.

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Cathay Pacific Group reports greatest loss in its history for the first half of 2020. Photo: Getty Images

In a statement sent to Simple Flying, the airline anticipates a net loss of $1.3bn for the six months ended June 30th, 2020. This is a massive reversal compared to a $167m profit the previous year and makes up the airline’s most significant loss.

$309m of the net loss are impairment charges for 16 aircraft. The Group believes these aircraft only resume “meaningful economic service” in the summer period of 2021.

Passenger traffic for Cathay

Cathay Pacific and its subsidiary, Cathay Dragon, carried 27,106 passengers in June, a 99.1% decrease compared to its numbers for June 2019. The airline was mainly sending passengers to locations in Southeast Asia, Mainland China, and Europe. This mimics Cathay Pacific’s figures for April, where there was a 99.6% drop in contrast with the previous year.

There proved to be a slight increase in traffic in conjunction with eased restrictions on transit travelers in Hong Kong International Airport (HKIA). HKIA resumed operations for transit passengers on June 1st. Transit travelers from the Philippines, Vietnam started to flow through. Needless to say, the numbers continued to be measly in comparison with a pre-COVID time.

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HKIA’s resumption of services for transit passengers improved passenger demand. Photo: Getty Images

Towards the end of June, Cathay Pacific restarted more long-haul services. Destinations included New York, San Francisco, Amsterdam, and Melbourne.

However, with quarantine measures in place, and several countries experiencing a second and third wave of the deadly virus, people are either not allowed to fly, or simply not ready. Even with more services in operation, the airline continued to carry an average of 900 passengers daily in June.

Currently, Hong Kong is also experiencing its third wave of COVID-19. August Tang Kin-Wang, Cathay Pacific’s CEO, remains wary of the recent cases of the virus in the city-state. According to the Bangkok Post, Tang called the new wave a “cause for concern” for the airline.

Less cargo-only flights in June

Both airlines transported 93,228 tonnes of cargo and mail last month, a 43.1% drop from June 2019. The month’s “revenue freight tonne km (RFTKs) fell 35.8% year on year”.

Ronald Lam, Cathay Pacific Group Chief Customer and Commercial Officer, explains that even the airline’s cargo-only flights took a hit in June. He said,

“Despite a mild pickup in general airfreight movements, our cargo tonnage fell by 5% month-on-month as demand for medical supplies waned following a peak month in May.”

Cathay Pacific puts safety first

Although the airline is in a tight spot right now, Lam said that safety should continue to be a priority. As such, the carrier will continue to increase its flight schedule at a gradual pace.

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Cathay Pacific seeks to resume only 10% of its normal capacity in August. Photo: Cathay Pacific

According to Lam,

“While some markets are starting to relax border restrictions and quarantine requirements in July, we remain cautious and agile in our approach to resuming our passenger flight services.”

The overall flight capacity has increased to 7% in July, a mere 3% increase from last month. In August, the number will go up to 10%.

The COVID-19 pandemic has well devastated the airline and its passenger numbers. However, it also recently gained approval from shareholders for a $5bn recapitalization plan. After securing the funds and further review of the future of the airline, Cathay Pacific just might be able to weather the pandemic.

What do you make of Cathay’s passenger numbers? Are you planning to fly with the airline soon? Let us know in the comments.