Hong Kong carrier Cathay Pacific on Wednesday said it lost HK$9.9 billion (US$1.27 billion) in the first half of this year as the coronavirus pandemic sent passenger numbers tumbling, eviscerating its business.
Before the pandemic, Cathay Pacific was one of Asia’s largest international airlines and the world’s fifth-largest air cargo carrier. But it has been battered by the evaporation of global travel.
The airline said it carried 4.4 million passengers in the first half of this year, a 76 per cent plunge year-on-year.
At the height of the global lockdowns in April and May, Cathay Pacific’s entire fleet was averaging just 500 passengers a day.
Cargo remained the lone bright spot, rising nine per cent year-on-year to HK$11.2 billion. Demand was driven up by a squeeze on space for cargo, which is often carried in the holds of passenger planes.
Despite the grim results, Cathay’s share price rose 12 per cent on Wednesday, its biggest one-day jump since 2008.
Bloomberg News said the rally was caused by a tweet by Chinese State-run Global Times saying Hong Kong’s airport may soon restart transfer flights to the mainland.
The paper gave no source for its tweet but investors were buoyed because transfer flights could give Cathay some much-needed extra passengers.
Unlike other big international carriers, Cathay has no domestic market to fall back on, and it was already under pressure after months of huge protests in Hong Kong last year caused passenger numbers to plunge.
Chairman Patrick Healy said 2020 had started promisingly, with signs that demand was beginning to return after the sometimes-violent protests had put travellers off visiting the financial hub. But then the pandemic struck.
In response to the health crisis, Cathay Pacific has tried to save cash by reducing capacity, cutting executive pay, introducing voluntary leave schemes and slashing other non-essential costs. It has so far refrained from any large-scale job cuts.
Hong Kong’s government also came to its rescue earlier this year with a HK$39 billion recapitalisation plan.
The deal allowed Cathay Pacific to raise some HK$11.7 billion in a rights issue on the basis of seven rights shares for every 11 existing shares held.
Preference shares were sold to the government via Aviation 2020, a new company it owns, for HK$19.5 billion and warrants for HK$1.95 billion, subject to adjustment.