Hong Kong airline Cathay Pacific had just managed to return to profits posting better than expected earnings numbers for the first half of the year, but is warning investors of the potential effect of the Hong Kong protests.
Cathay Pacific’s chairman John Slosar said on Wednesday that for the first time since 2016 the airline recorded a $172.2 million profit between January and June.
The numbers were due in part to lower fuel costs that helped make up for an 11.4% decline in Cathay Pacific’s cargo business.
Flying new routes and being able to utilize larger aircraft on the more popular ones helped to boost revenue.
Passenger numbers increased 4.4% to 18.3 million, yet profit per passenger dipped due to currency volatility and stiff competition on some of the airlines most popular routes.
While speaking about Cathay Pacific’s first half earnings and the potential for an ongoing trade dispute with the United States and the possibility of civil unrest, Slosar said, according to AINonline:
“Our cargo business was weaker, due in part to U.S.-China trade tensions, with a decline in both volume and yield. We benefited from lower fuel prices, but were adversely impacted by a stronger U.S. dollar.”
“Geopolitical and trade tensions are expected to continue to affect the global economy and, in turn, demand for air travel and air freight. The protests in Hong Kong reduced inbound passenger traffic in July and are adversely impacting forward bookings.”
Cathay Pacific had to cancel 150 flights
As demonstrators took to the streets on Monday, Hong Kong came to a virtual standstill forcing Cathay Pacific to cancel more than 150 flights.
Cathay Pacific told its customers to avoid flying on Tuesday, according to the Hong Kong Confederation of Trade Unions, saying that 2,300 airline employees joined the protests including 1,200 Cathay Pacific cabin crew and pilots.
The Asia Times is reporting that more protests are scheduled for tomorrow (Friday) that could force Hong Kong International Airport to shut down.
Protest organizers are calling on 10,000 demonstrators to greet passengers arriving in Terminal 1 starting at 1:00 p.m.
The United States has issued a travel warning to its citizens
The American State Department has warned US citizens to "exercise increased caution" when traveling to Hong Kong ahead of three days of scheduled protests.
The US Consulate in Hong Kong issued the following statement:
“Exercise increased caution in Hong Kong due to civil unrest.”
“Since June 2019, several large scale, and smaller political demonstrations have taken place in various areas of Hong Kong.”
“Most have been peaceful, but some have turned confrontational or resulted in violent clashes.”
“The protests and confrontations have spilled over into neighborhoods other than those where the police have permitted marches or rallies.”
“These demonstrations, which can take place with little or no notice, are likely to continue.”
Why are people protesting in Hong Kong?
Hong Kong is a semi-autonomous city within China which enjoys certain freedoms citizens in other parts of China don’t have.
Protests started over an extradition law that would allow Hong Kong citizens suspected of a crime to be extradited to other parts of China. Critics of the new law worry that the government in Beijing will use the law to extradite political opponents and others to China, where their legal protections are not guaranteed.
Citizens in Hong Kong are affraid that the new law is the first step in Beijing doing away with the “one country, two systems” policy that was agreed to when the UK handed Hong Kong back to China in 1997.
As the protests continue all eyes will be on China watching to see if they will send in the army to quell the protests and restore order.