Cathay reports USD 580m loss in Q1 2020

- A Monitor Desk Report 18 May, 2020 | 865 Views|-+
Dhaka: Cathay Pacific and its subsidiary Cathay Dragon reported a combined USD 580 million (HKD 4.5 billion) unaudited loss in the first quarter of 2020, the group said in a statement on May 15.

Hong Kong’s flag carrier reported a 99.6 per cent drop in passengers carried in April – the steepest ever reduction recorded by the airline group – from the 3.12 million customers carried in the same month last year.

The airline’s financial performance include losses from fuel-hedging contracts that soured as the price of jet fuel and oil plummeted, while its payments for a certain volume of fuel at a fixed cost remained significantly higher than the market rate.

On this note, Ronald Lam Siu-por, Chief Customer and Commercial officer, Cathay Pacific, said, “The COVID-19 pandemic continues to impact us in an unprecedented way … the financial outlook continues to be very bleak for the coming few months at least.”

Lam said he saw no “immediate signs of improvement” as the airline expected to carry around 500 passengers per day in May. The airline is used to carrying 100,000 people a day.

“This is the biggest challenge to aviation we have ever witnessed,” Lam said. “We are evaluating all aspects of our business to ensure that we remain strong and competitive when we emerge from this crisis."

“The world has changed dramatically over the past few months and it is imperative that we do everything in our ability to adapt to this new world in order to secure our future within it.”

Cathay Pacific had previously said it was looking at structural change that could affect its number of staff, routes flown and planes operated.

The collapse in passenger numbers last month reflects the 97 per cent cut in its flight schedule, which has been extended until the last week in June.

“Business and leisure travel will remain severely impacted for the foreseeable future,” Lam added. “Overall, we do not anticipate we will see a meaningful recovery for an extended period.”

The airline suggested in the stock exchange filing it subscribed to the view that travel demand would not return for a few years. IATA on May 13 said the air travel levels of 2019 would not return until 2023.

Cathay, the fifth-largest cargo airline in the world, has been supported by a surge in demand for air freight, which in turn has allowed it to charge higher prices for the service while launching cargo-only passenger flights.

The airline operated more than 500 cargo flights in April, double the number in March, offering some positive momentum. It carried 84,634 tonnes of cargo last month, down some 48 per cent from the preceding month because of the grounding of a major part of its cargo-carrying capacity.

In Q1 2020, the airline has carried almost two-thirds fewer passengers compared with the same period last year, due to a 50 per cent cut in available seat capacity and a 59 per cent slump in demand for travel.

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