Cathay cuts earnings outlook as travellers avoid Hong Kong

Bloomberg

Cathay Pacific Airways Ltd cut its earnings outlook after passenger traffic fell for a second month as protests that have put intense pressure on the carrier continued to disrupt travel and business in Hong Kong.
Second-half financial results will be lower than those of the first half, Hong Kong’s flag airline said in a statement, reversing previous forecasts.
Cathay also reported a second straight monthly drop in the number of passengers carried and warned of a “significant” decline in inbound bookings for the rest of this year, especially from China and other Asian markets.
“Our expectation is that rest of 2019 will remain incredibly challenging for the airline,” Chief Customer and Commercial Officer Ronald Lam said in the statement. “The mainland China market has been hit especially hard. Intense competition together with an increasing reliance on transit passengers over the short term has continued to apply additional pressure on yield.“
The comments underscore the latest setback for an airline buffeted by the protests in Hong Kong. Chinese regulators clamped down on Cathay after some employees took part in demonstrations, and the company’s decision to subsequently fire staff and warn workers about supporting the pro-democracy movement angered activists.
The airline appointed a new chief executive and chairman after their predecessors resigned amid the unrest.
“The status quo for Cathay has changed forever after the protests,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics. “The question now is about their survival. The Chinese will want to send a very clear message.”
Cathay, the world’s worst-performing major airline in the past three months, continued to fall.
Unrest in Hong Kong has led to a slump in visitors, particularly from mainland China, which accounts for the bulk of tourists. They’re especially wary due to a perception they could be targeted in the protests, which state media frame as being driven by violent extremists.