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Cathay Pacific posts 27.9% decline in full year net profit, says outlook “challenging" and warning of a “substantial” first half loss
March 13th 2020
Cathay Pacific Group chairman, Patrick Healy, said it is difficult to predict when the tide will turn for the aviation industry and that the airline group expected a loss for the interim 2020 half. Read More »
Healy’s advice was delivered at the airline group’s results announcement when the Hong Kong airline company revealed a 27.9% drop in net profit during a "turbulent year" in calendar 2019.
For the 12 months to December 31, 2019, Cathay said net profit was HK$1.7 billion (US$271.7 million) down from HK$2.3 billion in the prior corresponding period.
Revenue fell 3.7% to HK$107 billion, Cathay Pacific said in a regulatory filing to the Kong Kong Stock Exchange on Wednesday.
Healy said 2019 had started on a positive note as the airline group's three-year transformation program started to bear fruit amid a difficult geopolitical environment and trade tensions.
However, the political unrest in Hong Kong and escalating trade worries as China and the U.S. ratcheted up the rhetoric led to the Special Administrative Region's (SAR) economy slipping into recession and a sharp drop in demand for travel.
As a result, the second half results "fell well below what we would have hoped for".
"Last year was a turbulent year for the Cathay Pacific Group," Healy said in a statement.
Media reports estimated Cathay Pacific group carriers had about 120 aircraft parked at any one time given the reduced flying.
While the company said it was difficult to predict when market conditions would improve, it had guided the market to expect a "substantial loss for the first half of 2020". This represented a return to the red from a profit of HK$1.3 billion in the first half of 2019.
Although hopeful of an improvement in market conditions in the second half of calendar 2020, Healy cautioned the “scale of the challenge is unprecedented".
Chief operations and services delivery officer, Greg Hughes, told reporters the company was in discussions with Airbus and Boeing about potentially deferring deliveries of new aircraft.
“We are not yet at a point in time in concluding those discussions," Hughes said. "We don’t yet have formal redelivery dates for when those aircraft will be delivered to us.”
At December 31 2019, the airline group had 236 aircraft, including planes recently acquired with LCC, HK Express, and six freighters at cargo operator, Air Hong Kong.
Seventeen aircraft are due for delivery this year - four A350-900s and A350-1000s for Cathay Pacific, six A321neos for Cathay Dragon and four A320neos for HK Express.
