The Cathay Pacific Group will continue to take new planes and invest in product as it looks for an end to a crisis that will see it cut its March and April capacity by 65 percent.
The coronavirus crisis will also see the Hong Kong airline cut frequencies by up to 75 percent over the two months and it expects substantial cuts to follow in May.
“Substantial” is also how it is describing its expected first-half loss.
However, it believes unrestricted liquidity of $HK20 billion, access to funds, cost-cutting measures and strong vendor relationships will allow it to weather the crisis as a going concern.
The airline has also asked its staff to take three weeks of unpaid leave between March and June to help protect the business.
READ: Airlines slash more flights as fearful travelers stay home.
It revealed Wednesday it had already suffered a 28 percent fall in 2019 net profit to $HK1.69 billion ($US220 million) as a result of the political turmoil and recession that rocked Hong Kong.
The group’s second-half profit fell from $HK2.6 billion in 2018 fell to just $HK344 million in 2019.
A sharp drop in inbound and outbound passenger traffic saw Cathay Pacific and Cathay Dragon report a second-half loss of $HK434 million compared to a profit of $HK1.25 billion in the second half of 2018.
The first half of 2020 was also expected to be challenging with an already reduced winter season capacity.
Then COVID-19 hit and by the end of February, the passenger load factor had plummeted to 50 percent from 82,3 percent for 2019.
“It is difficult to predict when these conditions will improve,” chairman Patrick Healy said in the results announcement.
“Travel demand has dropped substantially and we have taken a series of short-term
measures in response.
“These have included a sharp reduction of capacity in our passenger network.
“Despite these measures, we expect to incur a substantial loss for the first half of 2020.
“We expect our passenger business to be under severe pressure this year and that our cargo business will continue to face headwinds.
“However, we are cautiously optimistic about cargo following the recent reduction in US-China trade tensions and we have maintained our cargo capacity intact.”
Healy said a strong US dollar, intense competition, especially in long-haul economy class, will continue to place significant pressure on yields.
“Although there is much uncertainty, we have an incredible brand with a reputation and track record of premium service and commitment to our customers that differentiates us from our competitors,” he said.
“These qualities and values remain at the heart of everything we do and are what will help us through the current challenges.”
“Our three-year transformation program has left the business leaner and more resilient, and we move forward with a culture of continuous improvement.”
The chairman said Cathay would continue to invest products, customers and fleet and would take delivery of new aircraft in 2020 in the hope the environment would improve.
This would allow it to retain the flexibility to add capacity back to the market as soon as we are able to.
“Our plan to take delivery of 70 new and more fuel-efficient aircraft by 2024 remains unchanged.”
