Hong Kong carrier Cathay Pacific issued a profit warning on Friday, estimating it will suffer a historic loss of HK$9.9 billion (US$1.3 billion) in the first half of 2020 as it reels from the coronavirus pandemic.
“The Group will record a net loss attributable to shareholders of approximately HK$9.9 billion, which compares to a net profit to shareholders of HK$1.3 billion for the same period in 2019,” the airline said in a statement.
Like airlines worldwide, Cathay has been battered by the evaporation of global travel during the pandemic. But the carrier is especially vulnerable because it has no domestic market to fall back on.
In a stark illustration of the travel collapse, Cathay said June passenger numbers were down 99.1 percent year on year.
“The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe,” chief customer and commercial officer Ronald Lam said in the statement.
He added there was a slight increase in the number of transit passengers following the easing of restrictions at Hong Kong’s airport but they are “yet to see any significant signs of immediate improvement”.
The airline also said 16 aircraft are “unlikely” to operate until summer in 2021, causing impairment charges amounting to around HK$2.4 billion.
On the cargo front, the carrier said there were fewer cargo-only passenger flights compared with May. Its cargo tonnage fell five percent month-on-month as demand for medical supplies waned following a peak month in May.
Hong Kong’s government came to the rescue of Cathay earlier this year with a HK$39-billion ($5 billion) recapitalisation plan.
Cathay chairman Patrick Healy had described the bailout as the only way to save the airline from collapse.
Shareholders approved the plan on Monday.
Under the proposal, Cathay will raise about HK$11.7 billion in a rights issue on the basis of seven rights shares for every 11 existing shares held, while preference shares will be sold to the government via Aviation 2020 for HK$19.5 billion and warrants for HK$1.95 billion, subject to adjustment.
Aviation 2020 will also have two “observers” to attend board meetings.
Lam said Cathay has adjusted its overall capacity for July to approximately seven percent and the airline hopes to operate up to 10 percent of its normal flight schedule in August.
Shares in the firm were down 1.3 percent in the afternoon.
Earlier this week, Akbar Al Baker, the chief executive officer of Qatar Airways, one of Cathay’s biggest shareholders, told Bloomberg Television he was confident the airline would overcome the crisis.