Cathay Pacific Group saw its cargo volumes further decline year-on-year in October but relatively better than the month prior as the overall market remains challenging, the Hong Kong flag carrier said.

The group also said its second-half results will be "significantly below" the first-half and that the short-term outlook remains challenging and uncertain.

Cathay Pacific and Cathay Dragon carried 183,119 tonnes of cargo and mail last month, recording a decline of 4.9% compared to the same month last year. This is, however higher than the 172,637 recorded in September.

The carrier said cargo and mail load factor fell by 2.4 percentage points to 68%. Capacity, measured in available freight tonne kilometres (AFTKs), was down 2.5% while cargo and mail revenue freight tonne-kilometres (RFTKs) dropped by 5.9%.

Cargo volumes to improve 

In the first 10 months of 2019, Cathay said the tonnage fell by 6.6% against a 0.4% increase in capacity and a 6.9% decrease in RFTKs, as compared to the same period for 2018.

"Cargo volume continued to improve as the market entered into its peak season of the year, with demand picking up after the National Day holidays in October. This began with an uptick in raw materials and machinery parts into mainland China, followed by encouraging exports from mainland China and Hong Kong, especially into trans-Pacific and European markets," said Cathay Pacific chief customer and commercial officer Ronald Lam, with month-on-month tonnage growth was recorded across all sales territories.

"We anticipate this positive momentum continuing through mid-December. However, overall cargo yield remained significantly below that of the same time last year," he added.

Weak travel sentiment

The group carried a total of 2.7 million passengers in October, a drop of 7.1% compared to October 2018, although higher than the 2.4 million passengers in September.

“It continues to be a challenging time for both the Cathay Pacific Group and for Hong Kong. In response to weakened travel sentiment to and from Hong Kong," Lam said, noting that Cathay Pacific has so far reduced its passenger flight capacity against our original schedule by 2-4% between August and October, and 6-7% for November and December.

“In October, demand for travel into Hong Kong remained weak with our inbound passenger traffic seeing a year-on-year decline of 35%, consistent with the trend seen in both August and September. The drop in outbound Hong Kong traffic was 13% in October, again similar to the trend over the past two months," he said, although saying that transit traffic via Hong Kong remained relatively less affected.

Japan up; China down

Lam further said that its mainland China routes felt significant pressure with weak travel sentiment to Hong Kong by mainland tourists. 

Its Japan routes, however, were the star in its network last month – buoyed by the Rugby World Cup which Cathay said has generated good demand.

“Overall we foresee a challenging remainder of 2019 for our airlines. We expect our second-half financial results will be significantly below those of our first-half. The short-term outlook remains challenging and uncertain," Lam said.