Picture=Cathaypacific.com

[Newsphopick=Kingsley Lim] Hong Kong – Cathay pacific, a carrier from Hong Kong, reported a first half loss of HK$9.9 billion (US$1.27 billion) as the coronavirus continues to inflict damage on the global economy. With the global economy slumping in the second quarter of the year, many airlines across the globe have reported a fall in revenue and seat bookings.

"The first six months of 2020 were the most challenging that the Cathay Pacific Group has faced in its more than 70-year history," said Chairman Patrick Healy in a statement announcing the sombre results. 

Healy added that "The global health crisis has decimated the travel industry and the future remains highly uncertain, with most analysts suggesting that it will take years to recover to pre-crisis levels." 

In the first six months of the year, the carrier reported that it carried 4.4 million passengers. This is a significant fall from the year-ago period by approximately 76 percent. As the virus spread from Wuhan, China, and around the world, the entire travel and tourism sector has been decimated by social restrictions and government-led efforts to curb the spread of the virus. 

During April and May when the coronavirus was at its peak in the region, Cathay’s entire fleet only carried an average of just 500 passengers a day – a fall from historical averages in prior years. 

Cargo, one of the carrier’s business segments, brought in HK$11,177 million in revenue for the first six months of the year. This is 9 percent higher than the year-ago period – and perhaps the only saving grace for Cathay’s in the first half of the year. 

Earlier this year, the Hong Kong government came to the rescue of Cathay Pacific with a HK$19.5 billion contribution to the company’s recapitalisation plan. 

Chairman Patrick Healy said: “We are grateful to the HKSAR Government’s capital support, which allows Cathay Pacific to maintain our operations and continue to contribute to Hong Kong’s international aviation hub status.” 

He added “We are also grateful to our shareholders for their confidence in the long-term future of Cathay Pacific and in the ability of Cathay Pacific’s management team to lead our airlines through what is the most challenging period in the Group’s history.” 

Tranche B of the recapitalisation plan will allow Cathay to raise HK$11.7 billion in a rights issue to existing shareholders while tranche C which is provided by the HK government, is a HK$7.8 billion bridge loan that can be drawn down with immediate effect. 

The recapitalisation of Cathay will help it to survive over the next couple of years but Healy says that he is not optimistic that the travel industry will pick up anytime soon as global travel is unlikely to reach pre-pandemic levels until at least 2024. 

According to Healy, with the tensions and the trade wars between US and China, airlines operating in the Asia-pacific region will remain affected for the foreseeable future. 

Healy added "with a global recession looming, and geopolitical tensions intensifying, trade will likely come under significant pressure, and this is expected to have a negative impact on both air travel and cargo demand."