The Cathay Pacific Group lowered its full-year profit outlook on Friday after reporting a second consecutive month of falling passenger numbers as anti-government protests continue to grip major parts of Hong Kong.
According to a company statement, Cathay Pacific Airways and its regional subsidiary Cathay Dragon posted a 7.1 percent drop in passenger numbers in September compared to the same month last year, to 2.4 million. The two carriers also reported a 4.4 percent decline in freight demand to 172,637 tons of cargo carried, compared to the same period in 2018.
“September was another challenging month for our passenger business, with revenue adversely affected by weakened market sentiment, particularly for travel into Hong Kong," said Cathay Pacific Group chief customer and commercial officer Ronald Lam. “The mainland China market has been hit especially hard, and we observed very weak demand for travel over the National Day holiday, traditionally a very strong period."
Lam added that routes to India were the “main bright spot, buoyed by strong demand between India and North America." However, intensifying competition coupled with “an increasing reliance on transit passengers over the short term" had continued to apply additional pressure on passenger yield.
Inbound bookings will continue to experience a “significant shortfall" for the remainder of the year, especially from mainland China and other Asian cities, Lam warned. Cathay’s second-half financials are also expected to fall short of those of the company’s first half, reversing its previous forecast in August. At the time, the group had surpassed expectations after reporting a $172.2 half-year profit and was looking forward to a strong second-half performance in line with the carrier’s normal financial results.
Now in the third year of its transformation plan, Cathay has felt the brunt of Hong Kong’s political unrest after several employees were fired over their involvement in anti-government protests. In August, two airline executives—CEO Rupert Hogg and chief customer and commercial officer Paul Loo—resigned following a politically charged week that saw the shutdown of Hong Kong International Airport.
To stem losses, Cathay is now looking to cut capacity to key business markets including Frankfurt; Paris; New York; Washington, D.C.; and Vancouver, British Columbia by month-end. Cathay Dragon will also see capacity cuts on service to Beijing, Medan, Indonesia, and Tokyo Haneda.