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Hong Kong carrier logs its worst financial results in its more than 70-year history
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Passenger revenue in 2020 declined 84.3% compared to 2019
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Cargo revenues amounted to a record HKD24.6 billion, an increase of 16.2% versus 2019
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The airline remains “still very much in survival mode.”
With the Covid-19 pandemic decimating the global aviation industry, Cathay Pacific reported an attributable full-year loss of HKD21.6 billion (US$2.8 billion) in 2020 from a profit of HKD1.7 billion in 2019.
This represents a loss of HKD9.9 billion in the first half, and a loss of HKD11.8 billion in the second half, the Hong Kong national flag carrier said in its annual results announcement.
“The Cathay Pacific Group experienced the most challenging 12 months of its more than 70-year history in 2020. COVID-19, and the resultant travel restrictions and quarantine requirements in place around the world, brought about an unprecedented disruption of the global air travel market and the repercussions have been huge. The International Air Transport Association (IATA) estimates that global passenger traffic will not return to pre-COVID-19 levels until 2024,” said group chairman Patrick Healy in a statement.
According to IATA, global passenger traffic in 2020 dropped 66% compared to 2019, the sharpest decline in the industry’s history. Meanwhile global cargo traffic decreased by 11% compared to 2019, the largest year-on-year drop since IATA began monitoring cargo performance in 1990.
Cathay Pacific said its passenger revenue in 2020 was HKD11.3 billion, a decrease of 84.3% compared to 2019, as its passenger business carried just over 13% of the passengers carried in 2019. Capacity was down 78.8% compared to the previous year and revenue passenger kilometers (RPKs) decreased 85.1%. Load factors averaged just 58%—a drop of 24.3 percentage points compared with 2019—and reached a low of 18.2% in October. Yields were up 4.8% to 56.3 cents.
Cargo, on the other hand, performed very well, though it too was affected by the substantial contraction in capacity usually provided by the bellies of our passenger aircraft, said group chairman Patrick Healy in a statement.
The carrier delivered record cargo revenues of HKD24.6 billion, an increase of 16.2% versus 2019, in a year when its capacity was down by more than 35%.
Healy said that even as the company restructured and reduced its workforce in 2020 to cope with the dire situation, “cash-preservation measures must continue unabated.”
“The pace of recovery remains highly uncertain and the Group is still very much in survival mode,” he added.
Looking ahead, he said: “Market conditions remain challenging and dynamic. It is by no means clear how the pandemic and its impact will develop over the coming months.”
He noted new challenges for the industry that include the emergence of new strains of COVID-19 and tighter social and travel restrictions imposed in some key markets.
Moreover, Hong Kong-based Cathay Pacific aircrew is subject to quarantine in Hong Kong, with no indication yet how long these measures will remain in place.
Healy said this has reduced the airline’s passenger capacity by about 60% and cargo capacity by about 25% compared to the start of this year.
“These new measures will increase our operating cash burn by approximately HK$300-400 million per month, on top of our existing monthly cash burn of about HK$1.0-1.5 billion.”
“We stated at the end of last year that we expected to operate at well below a quarter of pre-pandemic passenger flight capacity in the first half of 2021 with improvement in the second half of the year. Overall in 2021, we expected to operate at well below 50% passenger capacity. These statements are still largely valid,” said Healy.
Photo courtesy of Cathay Pacific
