SYDNEY (AUSTRALIA) – Cathay Pacific Airways Ltd of Hong Kong is expecting a “significantly higher” second-half loss than the record first-half loss caused by low demand, restructuring expenses and impairments on its fleet of aircraft, the airline said on Wednesday.
The airline reported a HK$9.87 billion ($1.27 billion) loss in the first half due to the pandemic. Analysts had on average forecast a full-year loss of HK$18.3 billion before the announcement, according to 13 polled by Refinitiv.
Its previous record annual loss was HK$8.7 billion in 2008, during the global financial crisis.
“We are still not seeing any meaningful improvement in our passenger business,” Cathay Chief Customer and Commercial Officer Ronald Lam said in a statement.
The airline reported a 98.6% fall in passenger numbers in November, though a smaller 26.2% decline in cargo carriage.
“Given the slow speed of recovery, we expect to operate about 9% of pre-COVID-19 capacity in December and slightly above 10% in January 2021,” Lam said of the passenger business.
Cathay said in October it would cut 5,900 jobs to help it weather the pandemic, including nearly all of the positions at its regional airline Cathay Dragon, which it shut down.
As part of the restructuring plan, expected to cost HK$2.2 billion, the remaining pilots and flight attendants signed new contracts that resulted in permanent pay cuts.
The airline expects to operate less than 50% of its normal passenger capacity in 2021 due to border closures. In the first half, it plans to operate well below 25%, but it forecasts a possible recovery in the second half as COVID-19 vaccines are rolled out more widely.
To help bolster its balance sheet in the meantime, Cathay received a $5 billion rescue package led by the Hong Kong government in June.