The airline promises to trim losses. But investors betting on the airline are betting on Hong Kong's future, too.
Hong Kong’s Cathay Pacific Airways Ltd expects a first-half net loss of HK$9.9 billion (£1.03 billion), 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$2.5 billion to HK$3 billion 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$1.35 billion 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 Chief Customer and Commercial Officer Ronald Lam said in a statement.
The airline, which last month received a $5 billion rescue package led by the Hong Kong government, said it planned to operate 7% of normal passenger capacity in July, rising to around 10% in August.
It will take a HK$2.4 billion 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$12.6 billion 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 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 Aug. 12.
($1=7.7530 Hong Kong dollars)
(Reporting by Jamie Freed; Editing by Clarence Fernandez and Muralikumar Anantharaman)
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Photo credit: A Cathay Pacific Boeing 777-300ER plane lands at Hong Kong airport after it reopened following clashes between police and protesters, in Hong Kong, China August 14, 2019. Thomas Peter / Reuters