Cathay Pacific is flying into a $1.3 billion loss

Cathay Pacific carried less than 1% of passenger numbers in June compared to what it did 12 months ago. 

Image Credit: AFP

Hong Kong: Cathay Pacific Airways is likely to post a first-half net loss of about HK$9.9 billion ($1.3 billion) after flying only 27,106 passengers last month, down 99.1 per cent from June 2019.

Passenger load factor for the airline and its Cathay Dragon unit was just 27.3 per cent in June, the carrier said. The international aviation landscape remains "incredibly uncertain" because of coronavirus-related border restrictions, Chief Customer and Commercial Officer Ronald Lam said.

"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," Lam said.

The virus has dealt a crushing blow to Cathay and other airlines worldwide, resulting in job losses and bankruptcies. In April, Cathay was flying as few as 458 passengers a day on average. That number increased to 900 a day in June.

Government pitches in

With its finances and prospects looking increasingly strained, Cathay last month proposed a HK$39 billion government-backed rescue plan that was approved by shareholders.

The Hong Kong government gets a 6.08 per cent stake in Cathay through an entity called Aviation 2020 and has placed two observers on the airline's board.

The rescue included a rights issue of 7 shares for every 11 held, at a subscription price of HK$4.68 apiece. 

Ramping up uncertainty

While the funding helps Cathay stave off collapse, a fresh wave of virus cases in Hong Kong and stricter social distancing measures in the city have added more uncertainty to its outlook.

"Demand continued to be very weak in June with our airlines carrying less than 1 per cent of the passengers we carried in the same month in 2019," Lam said.

Cathay has been hit particularly hard by COVID-19 as it has no domestic market to fall back on, and it was already in financial trouble as protests in Hong Kong put off visitors and prompted a change in management at the airline last year.