Cathay Pacific flags HK$9.9bn first-half loss as travel demand battered

Hong Kong-based carrier will take impairment charges on 16 planes

Hong Kong carrier Cathay Pacific issued a profit warning on July 17, 2020 estimating it has haemorrhaged $1.3 billion in the first half of the year as it reels from the Covid-19 coronavirus pandemic. AFP.
Hong Kong carrier Cathay Pacific issued a profit warning on July 17, 2020 estimating it has haemorrhaged $1.3 billion in the first half of the year as it reels from the Covid-19 coronavirus pandemic. AFP.

Hong Kong's Cathay Pacific Airways expects a first-half net loss of HK$9.9 billion (Dh4.68bn), including impairment charges on 16 planes, the airline said on Friday, as the coronavirus pandemic crushed travel demand.

Earlier, the airline had flagged a "substantial" first-half loss and that it had burned through cash of HK$2.5bn to HK$3bn each month since February.

The estimated first-half loss would be Cathay's biggest half-yearly loss in at least a decade and compares to a HK$1.35bn profit in the first half of 2019, before widespread anti-government protests and the virus decimated demand.

"The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe," Cathay Pacific' chief customer and commercial officer Ronald Lam said in a statement.

The airline, which last month received a $5bn rescue package led by the Hong Kong government, said it planned to operate 7 per cent of normal passenger capacity in July, rising to around 10 per cent in August.

It will take a HK$2.4bn impairment charge alongside its half-year results that mainly relates to 16 planes that are unlikely to re-enter meaningful service before the 2021 summer season, the company said.

Before the Friday announcement, Cathay was expected to post a HK$12.6bn full-year loss in 2020, according to the average forecast of 13 analysts polled by Refinitiv.

The airline said it would make tough decisions by the fourth quarter after reviewing all aspects of its business model, including aircraft orders.

It has accepted government employment subsidies that prevent it from cutting Hong Kong-based staff through August.

Cathay Pacific said this month it was evaluating whether to send some of its aircraft to less humid locations for storage as it reviews the size of its fleet in light of the fall in demand.

The airline is due to release its first-half results on August 12.

Published: July 17, 2020 10:28 AM

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