Cathay Pacific is “exploring all options” to ensure the airline group survives the severe impact of the coronavirus pandemic, it said on Thursday.
Preserving cash and cutting spending were its biggest priorities, the carrier said, as it reported a 90 per cent year-on-year drop in passenger volume for March.
Hong Kong’s flagship airline group said it saw the economic impact of the global pandemic intensifying, making a recovery timeline “impossible to predict”, with no improvement in pre-booked travel trends.
Cathay warned it expected its average daily passenger numbers to remain below 1,000 throughout April, with the airline carrying just 302 customers in a day earlier this week.
“We are exploring all options to ensure that the Cathay Pacific Group rides out this current storm, and is able to compete vigorously and to help Hong Kong recover when we emerge from this crisis,” Ronald Lam Siu-por, the airline’s chief customer and commercial officer, said in a statement.
Among the possible options the airline may consider, is asking shareholders, Swire Pacific and Air China, for financial support. The pair own 45 per cent and 29.99 per cent respectively. Qatar Airways has a 9.94 per cent stake.
When asked a few weeks ago about the possibility of the airline issuing new shares, bonds or other financial instruments - or if it required a loan - Swire Pacific director of public affairs James Tong Wai-pong said: “Swire Pacific remains a committed long term shareholder in Cathay Pacific. We continue to have confidence in its business and long term prospects.”
In March, the airline slashed its flight schedules by two-thirds, triggered by the collapse in global travel. For its business, demand fell 84.3 per cent, outstripping its 73.2 per cent cut in capacity, amid the backdrop of the worsening global pandemic. Cathay will operate just 3 per cent of its planned flight schedule in April.
The airline carried 311,128 passengers last month, down from 4.32 million in the same month last year. In the first three months of 2020, the airline carried 52 per cent fewer customers across the comparable period in 2019.
Of the remaining flights the airline did operate, it managed to fly them on average half full.
As the fifth largest air cargo carrier in the world, Cathay carried 119,000 tonnes of cargo, or 35.6 per cent less, because of the grounding of passenger planes. It operated 257 pairs of cargo-only passenger flights to fulfil the huge demand for air freight.
Cathay said “passenger demand dropped rapidly and tremendously in late March” after restrictions on non-residents entering Hong Kong, and a ban on transits through Hong Kong International Airport came into effect.
Faced with imported Covid-19 cases, the authorities got tough on returnees but Cathay added scores of extra flights to return Hongkongers fleeing Britain and the US to the relative safety of the city, though the airline acknowledged the extra flights “lessened” the drop in inbound passenger traffic.
Transport analyst Luya You, of brokerage Bocom International, said the passenger number drop was not a surprise given the restrictions on movement around the world.
“A potential bright point could be cargo in upcoming weeks. Cargo revenue won’t be enough to offset passenger revenue loss, but it could cushion the blow from high monthly fixed expenses,” she said. “Cathay has always had one of the strongest cargo operations in the Asia-Pacific. It would make sense for them to capitalise on this leadership and continue adding cargo capacity on key routes.”
The airline did not reveal its financial impact for March, unlike February, when Cathay Pacific and Cathay Dragon made an unaudited loss of HK$2 billion, but the airline group is still expected to register a “substantial” first-half loss.
Cathay’s performance is a slight contrast to Asian rival Singapore Airlines Group (SIA), which on Wednesday reported a 60.4 per cent fall in passengers carried in March on planes 57 per cent full.
The airline had cut capacity by two-fifths. It warned it could extend its April flight reductions of 96 per cent if travel restrictions remained in place. The company has secured a bailout worth up to US$13 billion.
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