The Cathay Pacific Group has issued a profit warning as it released combined traffic figures for both Cathay Pacific and Cathay Dragon for June 2020 — underscoring the continued decline in its passenger and cargo volumes despite some pick-up noted at end June.

Cargo, pax traffic 

Cathay Pacific and Cathay Dragon carried 93,228 tonnes of cargo and mail last month, a decrease of 43.1% compared to June 2019. The month’s revenue freight tonne-kilometres (RFTKs) also fell 35.8% year-on-year.

The cargo and mail load factor increased by 11.7 percentage points to 74.5%, according to Cathay Pacific, while capacity, measured in available freight tonne kilometres (AFTKs), was down by 45.9%.

In the first six months of 2020, the Group saw tonnage fell by 31.9% against a 31% drop in capacity and a 24.6% decrease in RFTKs, as compared to the first-half period for 2019.

In terms of passengers, the Group carried a total of 27,106 passengers last month, a decrease of 99.1% compared to June 2019. The month’s revenue passenger kilometres (RPKs) fell 98.8% year-on-year. In the first six months of 2020, the number of passengers carried dropped by 76% against a 65.7% decrease in capacity and a 72.6% decrease in RPKs, as compared to the same half-year period for 2019.

“The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe. Although we have begun to see some initial developments, notably a slight increase in the number of transit passengers following the easing of transit restrictions through Hong Kong International Airport, we are still yet to see any significant signs of immediate improvement,” said Ronald Lam, Cathay Pacific Group chief customer and commercial officer.

Increased in connecting passengers

“We observed a gradual pickup in connecting passenger demand as the ban on transit traffic through Hong Kong International Airport began being partially eased,” Lam said.

He noted that towards the end of June, transit traffic reached about 32% of overall traffic, with notable demand from destinations in Southeast Asia such as the Philippines and Vietnam to North America.

“This change in traffic mix meant a more tapered average yield performance though.”

Cathay Pacific continued to operate a full freighter schedule as well as chartered flights from its all-cargo subsidiary, Air Hong Kong, in June.

It noted, however, that there were fewer cargo-only passenger flights compared with May.

Fewer cargo-only pax flights

“Despite a mild pickup in general airfreight movements, our cargo tonnage fell by 5% month-on-month as demand for medical supplies waned following a peak month in May. The reduction of long-haul carriage from the Chinese mainland and Hong Kong made way for movements from Southeast Asia and the Indian sub-continent as local lockdown measures eased,” Lam said. 

“Meanwhile, the improvement in inbound Hong Kong loads and network support led to a higher load factor, which increased 11.7 percentage points year-on-year to 74.5%. Yields came down following the significant rise seen in May.”

Outlook

Cathay Pacific noted that despite the recent improvements cited, the Hong Kong flag carrier remains cautious — and said that the only certain thing moving forward is that the global aviation industry will be “significantly changed” post-COVID-19.

“While some markets are starting to relax border restrictions and quarantine requirements in July, we remain cautious and agile in our approach to resuming our passenger flight services,” Lam said. 

He noted that the Cathay Group has adjusted overall capacity for July to approximately 7%, which remains subject to the potential further relaxation or tightening of government health measures.

The Group is expected to operate up to 10% of the normal flight schedule in August — and will continue to assess the potential of increasing more flights and adding destinations for our customers in the coming months.

“The one certainty facing the global aviation industry is that the landscape will be significantly changed when international air travel recovers. The Group is moving decisively to best position the business to be competitive and to secure its financial health over the long term in a new normal,” Lam added.

Profit Warning

The Directors of Cathay Pacific estimate that for the six months ended June, 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.