Cathay warns of ‘significant’ drop in H1 profit

Bloomberg

Cathay Pacific Airways Ltd, among the most high-profile corporate casualties of the pro-democracy protests in Hong Kong, is turning into one of the most impacted airlines from the novel coronavirus outbreak.
First-half financial results will be “significantly down” from a year earlier, Cathay Chief Customer and Commercial Officer Ronald Lam said in a statement. The airline and Cathay Dragon carried 3.8% fewer passengers in January, with the drop only likely to deepen as they cut 90% of capacity to China.
“This was the most challenging Chinese New Year period we have experienced,” Lam said, referring to the national holidays that were at the end of January. Even before the epidemic, “the first half of 2020 was already expected to be extremely challenging financially,” he wrote.
Cathay is particularly exposed to the virus because sales from Hong Kong and China account for about half of its total revenue. The company is bracing for what Chief Executive Officer Augustus Tang described as a “very significant impact” the virus will have on travel.
More than 50 countries and territories have imposed travel restrictions on China and authorities in some places have also denied entry to passengers arriving from Hong Kong, which shares a border with mainland China.

Chinese Exposure
Lam said that the year had started “fairly positively” with “satisfactory” passenger traffic volume through the first three weeks. Then the virus hit.
“Our performance deteriorated rapidly in the last week of January as the novel coronavirus situation became more severe, and it continues to weaken significantly.”
Tens of thousands of flights that could have carried millions of passengers in and out of China have been cancelled because of the virus, threatening to further strain the finances of an industry that had been reeling from multiple headwinds such as the US-China trade war.
According to OAG Aviation Worldwide, the outbreak has cost airlines servicing the region $652 million in lost revenue.
The carrier’s stock tumbled 8.9% this year. Cathay had already warned that profit in the second half of last year would be “significantly” lower than the first because it was badly hit by months of protests in Hong Kong.
Cathay’s woes prompted parent Swire Pacific Ltd to issue its own profit warning, predicting that first-half results will be “materially worse” than a year earlier.

China’s biggest airlines
report early hit from virus
Bloomberg

China’s three largest airlines reported declines in January passenger traffic because of the coronavirus outbreak, with the shortfalls likely to deepen this month as the epidemic continues to disrupt travel for millions of people.
Air China Ltd’s numbers slipped 2.9% from a year earlier, while China Southern Airlines Co’s fell 4.6% and China Eastern Airlines Corp’s dropped 5.4%, according to statements filed to Hong Kong’s stock exchange. Their totals ranged from 9.2 million to 11.4 million passengers.
Air China didn’t mention virus in its statement, while the other two acknowledged they had suspended some routes and altered services because of the outbreak, which was first detected in Wuhan city in the central Chinese province of Hubei.
Airlines began suspending flights from about January 23 after the government began locking down Wuhan and other Chinese cities. The outbreak coincided with the Lunar New Year holidays, a typically busy time for airlines as millions of people travel home to see their families. Airlines carried only a quarter of last year’s volume of passengers between January 25 and February 14, the Transport Ministry said.
China’s “big three” have drastically cut flights now, as have other domestic players and international carriers that fly in and out of the country. Air-travel analytics company Cirium estimates nearly 86,000 domestic and international flights to and from China were cancelled from January 23 through February 11.
The Chinese government has said it will exempt airlines from paying a civil aviation fund fee as part of relief measures for companies caught up in the outbreak.