Hong Kong's Cathay Pacific Airways surpassed financial expectations after reporting a half-year profit on Wednesday, but warned that citywide protests sparked by a controversial government extradition bill are affecting future bookings.
According to Cathay Pacific’s chairman John Slosar, the airline recorded a $172.2 million profit, the first for the January-June period since 2016, as lower fuel costs helped offset an 11.4 percent decline in cargo revenue. The introduction of new routes in 2018 and 2019, increased frequencies, and the use of larger aircraft on popular routes also contributed to the strong performance. Total passengers carried increased by 4.4 percent, to 18.3 million; however, passenger yield dipped 0.9 percent due to intense competition in premium and long-haul economy class and volatility in foreign currency markets.
“Our cargo business was weaker, due in part to U.S.-China trade tensions, with a decline in both volume and yield. We benefited from lower fuel prices but were adversely impacted by a stronger U.S. dollar,” Slosar said. “Geopolitical and trade tensions are expected to continue to affect the global economy and, in turn, demand for air travel and air freight. The protests in Hong Kong reduced inbound passenger traffic in July and are adversely impacting forward bookings.”
Hong Kong came to a virtual standstill on Monday as widespread demonstrations swept across the city, forcing Cathay to cancel more than 150 flights. The airline, which serves nearly 200 cities around the globe, also urged customers not to fly on Tuesday. According to the Hong Kong Confederation of Trade Unions, more than 2,300 aviation employees joined Monday’s general citywide strike, including 1,200 Cathay Pacific cabin crew and pilots.
AirAsia, Air China, Hong Kong Airlines, and Cathay’s recently acquired Hong Kong Express also had to scrap service, leading to the cancellation of some 94 flights. Monday’s unrest also led to the temporary closure of one runaway at Hong Kong International Airport.
Despite headwinds, Cathay projects positive growth for the second half of the year, in line with the carrier’s normal financial results. Now in the third year of its transformation plan, the airline ended the first half of the year with 216 aircraft, including four new Airbus A350-1000s. As of June 30, Cathay had an additional 67 new aircraft on order for delivery over the next five years.