Cathay Pacific Boeing 777-300 ER taking off. Photo: Cathay Pacific

MIAMI – The Cathay Pacific Group issued yesterday a profit warning and released combined Cathay Pacific (CX) and Cathay Dragon (KA) traffic figures for June 2020.

In its 2019 annual results announcement dated 11 March 2020, the Group had disclosed that it expected to incur a substantial loss for the Q2 of 2020.

The Group announced also the data for the month of June 2020 for CX and KA had a decrease, for passenger traffic, of 99.1% compared to June 2019.

Cathay Pacific Boeing 777-300 ER taking off. Photo: Masakatsu Ukon

Details of Profit Warning


The Directors of CX estimate that for Q2 2020, the Group will record a net loss attributable to shareholders of approximately HK$9.9bn, which compares to a net profit to shareholders of HK$1.3 bn for the same period in 2019.

This includes impairment charges amounting to approximately HK$2.4 bn, which mainly relate to 16 aircraft that are unlikely to re-enter meaningful economic service again before the 2021 summer season together with certain airline service subsidiaries assets.

This estimated interim net loss is in the process of being reviewed by their auditors and may be subject to adjustments.

Cathay Pacific Boeing 777-267 taking off from Hong Kong International Airport (HKG).

Traffic Figures for June 2020


According to the Group, it has carried a total of 27,106 passengers last month, a decrease of 99.1% compared to June 2019.

Also, the month’s revenue passenger kilometres (RPKs) fell 98.8% year-on-year.

Passenger load factor dropped by 59.3 percentage points to 27.3%, while capacity, measured in available seat kilometres (ASKs), decreased by 96.1%.

In Q2 2020, the number of passengers carried dropped by 76% against a 65.7% decrease in capacity and a 72.6% decrease in RPKs, as compared to the same half-year period for 2019.

Cathay Pacific Airbus A350-1000 taking off from Toulouse Airport (TLS).
Photo: Clement Alloing

Cargo Numbers


The two airlines carried 93,228 tonnes of cargo and mail last month, a decrease of 43.1% compared to June 2019. The month’s revenue freight tonne kilometers (RFTKs) fell 35.8% year-on-year.

The cargo and mail load factor increased by 11.7 percentage points to 74.5%, while capacity, measured in available freight tonne kilometres (AFTKs), was down by 45.9%.

In Q2 2020, tonnage fell by 31.9% against a 31% drop in capacity and a 24.6% decrease in RFTKs, as compared to the first-half period for 2019.

The airlines continued to operate a full freighter schedule as well as chartered flights from its all-cargo subsidiary, Air Hong Kong (LD), in June. There were fewer cargo-only passenger flights compared with May.

Cathay Pacific Boeing 747-8F taxing. Photo: Cathay Pacific

Statement from Chief Customer and Commercial Officer


Ronald Lam, Cathay Pacific Group Chief Customer and Commercial Officer said, “The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe.”

“Although we have begun to see some initial developments, notably a slight increase in the number of transit passengers following the easing of transit restrictions through Hong Kong International Airport (HKG), we are still yet to see any significant signs of immediate improvement.”

Cathay Pacific Airbus A350-900 taxing. PHOTO: Cathay Pacific.

Mr. Lam said of the airlines’ June traffic performance that “Demand continued to be very weak in June with our airlines carrying less than 1% of the passengers we carried in the same month in 2019.”

“We operated about 4% of our normal passenger flight capacity in June. This was slightly more than we operated in May, having resumed services to some destinations such as New York, San Francisco, Amsterdam, and Melbourne in late June.”

“Load factor remained low at 27.3%, and on average we carried approximately 900 passengers a day only.”

“We observed a gradual pickup in connecting passenger demand as the ban on transit traffic through HKG began being partially eased.”

Cathay Pacific Airbus A350-1000 taxing at Toulouse Airport (TLS). Photo: Clement Alloing.

“Towards the end of the month, transit traffic reached about 32% of overall traffic, with notable demand from destinations in Southeast Asia such as the Philippines and Vietnam to North America.”

“This change in traffic mix meant a more tapered average yield performance though.”

Mr Lam also commented on cargo operations, citing a drop.

“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”

“The reduction of long-haul carriage from the Chinese mainland and Hong Kong made way for movements from Southeast Asia and the Indian sub-continent as local lockdown measures eased.”

“Meanwhile, the improvement in inbound Hong Kong loads and network support led to a higher load factor, which increased 11.7 percentage points year-on-year to 74.5%. Yields came down following the significant rise seen in May.”

Cathay Pacific Boeing 747-8F taxing.

Future Outlook


Earlier this week, CX’s shareholders passed the resolutions pertaining to the company’s HK$39 bn (US$5.03bn) recapitalization plan.

The management team is moving forward with a comprehensive review of all aspects of the Group’s operations and will make its recommendations to the Board on the future size and shape of the airlines by the fourth quarter.

Mr. Lam said, “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.”

“We have adjusted our overall capacity for July to approximately 7%, which remains subject to the potential further relaxation or tightening of government health measures.”

“We expect that our airlines will operate up to 10% of the normal flight schedule in August and will continue to assess the potential of increasing more flights and adding destinations for our customers in the coming months.”

Cathay Pacific Airbus A350-1000 taking off from Toulouse Airport (TLS). Photo: Clement Alloing

Preventive Measures Taken


Mr Lam also said about future outlook: “The one certainty facing the global aviation industry is that the landscape will be significantly changed when international air travel recovers.”

“The Group is moving decisively to best position the business to be competitive and to secure its financial health over the long term in a new normal.”

“What will not change is our resolute commitment to safety, to serving our customers and our dedication to contributing to the success of the HKG aviation hub.”

“We remain absolutely confident in the long-term prospects of both the Cathay Pacific Group and our home hub.”

It remains clear that Cathay Pacific, like with many other airlines, are feeling the pinch considerably.

However, the message that can be taken from this is that preventive measures are being taken and that the airline will be strong enough to make it to the other side of the rainbow going forward.

Comments