MIAMI – This week, Cathay Pacific (CX) has unveiled its interim results with revenues of HK$27,669m.
This represents a drop of 48.3% in comparison to the same period last year.
For the other red numbers, the company recorded a HK$9,865m loss in profit.
In comparison with 2019, it was HK$1,347m, with the representative change being -HK$11,212m.
In response, CX Chairman, Patrick Healy said six passed months of 2020 have been the most challenging in carrier’s 70-year-history.
Thus, the airline announced a HK$39bn recapitalization, which concluded on August 12.
Losses and Shares Performance
After tax, CX and KA reported a loss of HK$7,361m in first half of 2020 against reported profit of HK$675m in same period in 2019.
Regarding company’ s subsidiaries and associates, the share of losses was HK$2,504m.
In the first half of 2019, profits were recorded at HK$672m.
As result, CX and KA had a profit margin loss of 35.7% during first six month of 2020.
In comparison with 2019, which number was 2.5%, the change records -38.2%.
Passenger Revenue and Business Performance
Both companies, CX and KA, saw a decrease on passenger revenue by 72.2% and in RPK traffic by 72,6%.
In consequence, it achieved HK$10,396m on passenger revenue
According to the airline, the loss during first half of 2020 reflects serveral imposed global travel restrictions, border controls and quarantine arrangements.
These led the “precipitous” drop in passenger demand.
The CX group carried 4.4 million of passengers in the period, which left it with 76% less than in 2019.
By April and May, situation got worse with as only 500 passengers per day were carried.
In Average Seat Kilometre (ASK) Capacity, the company reduced its performance by 65.7% so far in 2020.
In February the number was 29%, in March was 73%, and in April and May was 97%.
Then, in June, CX and KA added capacity back following a lightly lifting on travel restrictions.
CX’s Actions to Face Crisis
Regarding funds in recapitalization, the carrier received HK$19.5bn preference share issue with attached warrants.
Then, a remaining HK$11.7bn in rights issue and a HK$7.8bn in bridging loan facility.
This support was provided by airline’s shareholders and the Hong Kong Special Administrative Region Government.
According to Healy, the reported loss is net of the receipt of HK$1,060m of COVID-19 related government grants globally.
But other HK$2,465m in impairments and related charges on 16 aircraft are included, too.
Healy added that the later assets are “unlikely to re-enter meaningful economic service again.”
At least, before they retire or are returned to lessors.
Business’ Cargo Performance
Despite other red numbers, CX group saw an increase in its cargo yield. It recorded 44.1% to HK$2.71.
The airline further clarified that these numbers were higher due to an imbalance between capacity and demand in cargo market.
As result, the company had a cargo revenue of HK$11,177m, an up of 8.8% compared to first half of 2019.
The load factor also increased 5.9% to achive 69.3%.
Overall tonnage carried decreased by 31.9% to 667 thousand tonnes.
Long Road Ahead
Quoting the International Air Transport Association (IATA) analysis, Healy stated that gradual recoveries would be hard to achieve.
While 2024 would be the year to return to pre-crisis levels in international passenger demand, other situations might affect this scenario.
Thus, Healy said the group did not expect to see a meaningful recovery in their passenger business for coming years.
Following these prospects, the company will introduce a rationalization plan.
This includes a recommendation to the Board to optimise the group’s size and shape.
It remains clear how badly hit CX’s financials are.
From the political unrest in Hong Kong to COVID-19, the rationalization plan will be something hot on the agenda.
This is paramount for survival.