Cathay Pacific predicts ‘highly challenging operating environment’ in 2020

Danny Lee

Cathay Pacific said it expected 2020 to be a “highly challenging” year, marking little room for improvement after its business was hampered last year by several months of social unrest in Hong Kong.

Unveiling its December business performance, the city’s flagship airline said its inbound traffic had fallen by almost half for the second month running.

The airline group’s China business also remains significantly weak, despite this typically being one of the busiest months of the year.

“We anticipate 2020 will continue to present us with a highly challenging operating environment,” said Ronald Lam Siu-por, the airline’s chief customer and commercial officer.

“Advance bookings for Lunar New Year appear promising with the boost in transit passengers; however, we continue to see a significant shortfall for the period after that, especially from inbound traffic.”

Cathay Pacific has the second half of its 2019 profit outlook would be “significantly below” the first six months of last year. Photo: AP

Yet, some long-haul flights have performed better as travellers from mainland China, Taiwan and Japan have stayed away.

The carrier said the second half of its 2019 profit outlook would be “significantly below” the first six months of last year. It is expected to unveil its annual financial results for last year in March. The airline made HK$1.34 billion in the first half of last year.

In December, Cathay Pacific and Cathay Dragon carried 2.99 million passengers, some 111,000 fewer year on year, or down 3.4 per cent. The airline’s planes were 85 per cent full across the month, an improvement of 1.2 percentage points as some flights were cancelled because of the fall in demand.

The overall decline in December was far smaller than previous months, which saw November traffic fall by 9 per cent, and September and October by 7.1 per cent.

However, inbound travel fell 46 per cent, the same figure for the second month in a row. Outbound traffic fell just 4 per cent, but the airline said it was “significantly below” for a peak holiday month.

Cathay clawed back some of the lost business through the latter half of the year, as it aggressively sought out transit passengers with cheaper air tickets, as connecting travellers carried by the airline increased by 15 per cent in December.

Signs of a full recovery in the airline’s traffic remains somewhat unclear with the recent December and January 2020 straddling peak period demand for travel, including the Lunar New Year. Demand for flights in the airline’s key China market last month continued to shrink by more than a fifth, for the fifth consecutive month.

Overall, the airline avoided 2019 being as bad as the global financial crisis of 2009, but it did suffer from the worst December in three years.

Passenger traffic last year fell just 0.7 per cent to 35.34 million customers flown from 2018, while the amount of cargo carried fell 6.1 per cent to 2.02 million tonnes, amid a slowing global economy and the US-China trade war.

The airline is cutting capacity in 2020 by 1.4 per cent, reversing a plan to expand the airline by 3.4 per cent. Staff are also poised to be offered voluntary unpaid leave to help the airline’s shortfall in revenue.

This article Cathay Pacific predicts ‘highly challenging operating environment’ in 2020 first appeared on South China Morning Post

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