Cathay rises as reopening chance offsets coronavirus

Bloomberg

Cathay Pacific Airways Ltd shares extended their double-digit rally after a Chinese state-run newspaper tweeted that Hong Kong’s airport may restart transfer flights to mainland China, a move that could inject the beleaguered carrier with some much-needed travelers.
Cathay climbed more than 13%, its biggest intraday gain in two months, as the Global Times said on Twitter that the transfer flights “could soon resume.” The newspaper cited a source it didn’t identify. Cathay typically relies on mainland traffic for a large portion of revenue, and the tweet came after the carrier reported a record loss and warned of more gloom ahead.
Airline stocks globally already were outperforming on signs of a pickup in traffic in parts of
the world, a gradual reopening of some borders and renewed hopes for a vaccine.
A Bloomberg gauge of Asia-Pacific carriers rose 3.9% as of 2:50 pm in Hong Kong, the most since July 6. Cathay led those gains.
The stock-market enthusiasm contrasted with Cathay’s announcement during the lunchtime trading break that it suffered a first-half net loss
of HK$9.9 billion ($1.3 billion) as the coronavirus pandemic brought global travel to a near standstill. The carrier said it doesn’t expect any meaningful recovery in business for some time.
That news was already priced in, however, given that Cathay had warned about the loss last month.
In a statement, Chairman Patrick Healy said the airline and its Cathay Dragon unit flew only 4.4 million passengers in the first six months, down from 18.3 million a year earlier.
Passenger revenue tumbled 72% to HK$10.4 billion during the period. It flew an average of just 500 passengers a day in April and May.
“The global health crisis has decimated the travel industry and the future remains highly uncertain, with most analysts suggesting that it will take years to recover to pre-crisis levels,” Healy said.
The first-half loss includes
impairment charges of HK$2.5 billion relating primarily to 16 aircraft unlikely to return to meaningful economic service again.
The pandemic made matters much more grave for Cathay and airlines in the US and elsewhere, many of which are relying on government aid to survive. Several have collapsed.