Cathay Pacific said it expects “substantial” losses in the first half of 2020 and will cut more flights as the coronavirus (Covid-19) outbreak hits demand for air travel worldwide.
Hong Kong’s flag carrier, which said it had already been hit by months of “social unrest” in the city and “mounting US-China trade tensions” last year, is now facing the fallout from the spread of the coronavirus as airlines around the world have cut capacity in an effort to reduce costs in response to the surge in coronavirus cases worldwide.
Cathay Pacific chairman Patrick Healy said the first half of 2020 was expected to be “extremely challenging financially”.
“Travel demand has dropped substantially and we have taken a series of short-term measures in response. These have included a sharp reduction of capacity in our passenger network. Despite these measures we expect to incur a substantial loss for the first half of 2020,” he said.
Healy added that it is difficult to predict when these conditions will improve.
The airline posted a net profit of HK$1.69 billion (US$218 million) for the year ending December 2019, down 28 per cent from HK$2.35 billion in 2018.
Cathay, which had already announced capacity cuts on several routes across its global network this year such as routes to mainland China, Japan and South Korea, said “substantial” passenger capacity and frequency reductions were also likely for the month of May.
According to the airline, it has cut capacity by approximately 30 per cent for February and by 65 per cent for March and April, with frequencies cut by approximately 65 per cent and 75 per cent respectively over the same periods.
“The scale of the challenge we currently face is unprecedented. The outlook is very uncertain. Having said that, we remain confident in the future of Cathay Pacific,” Healy said.
Earlier this year, the airline had asked its 27,000 staff members to consider taking three weeks off without pay. Cathay said 80 per cent of its staff have now signed up for unpaid leave.
The airline industry is facing a loss of revenue between US$63 billion and US$113 billion, according to The International Air Transport Association, as several airlines around the world have cut flights and suspended routes due to a drop in demand resulting from the global spread of the coronavirus.