SYDNEY- Hong Kong’s Cathay Pacific Airways said on Wednesday it expects to report a substantial loss in the first half of this year and slash more capacity as the coronavirus outbreak erodes travel demand, after posting a drop in 2019 earnings.
It posted a net profit of HK$1.69 billion (168.80 million pounds) for the year ended December 2019, down 28% from a HK$2.35 billion profit in 2018. That was in line with an average estimate of HK$1.63 billion from 11 analysts polled by Refinitiv.
Cathay’s performance in the second half of 2019 was hit by widespread, sometimes violent anti-government protests in Hong Kong. It also faced mounting Chinese scrutiny after some staff supported the demonstrations.
The airline is now grappling with a fresh crisis due to the coronavirus and said it has slashed capacity across its network by 65% in March and April, up from earlier plans for a 40% cut, as travel demand has been hit globally.
The airline said that at the end of February, planes were flying half-full despite capacity cuts of 30% and air fares had also fallen significantly compared to the prior year.
“Travel demand has dropped substantially and we have taken a number of short-term measures in response,” Cathay Chairman Patrick Healy said in a statement.
“These have included a sharp reduction of capacity in our passenger network. Despite these measures we expect to incur a substantial loss for the first half of 2020.”
Cathay said it had unrestricted liquidity of HK$20 billion and it expected to remain a going concern given the availability of sources of funds and cost-cutting measures such as asking all staff to take three weeks of unpaid leave.
Its major shareholders include Swire Pacific Ltd, Air China Ltd and Qatar Airways.
(Content and photos syndicated via Reuters)