Trade war headwinds buffet Cathay cargo

Business | Avery Chen 21 May 2019

Cathay Pacific Airways (0293) posted yesterday that the number of cargo and mail carried by Cathay Pacific and Cathay Dragon fell 6.2 percent year-on-year to 163,694 tons in April, and it expected a continuous pressure on yields for its passenger and cargo business amid the ongoing Sino-US trade war.

The cargo and mail load factor dropped by 5.5 percentage points to 62.5 percent last month, while capacity, measured in available freight ton kilometers, was up by 0.9 percent and cargo and mail revenue freight ton kilometers dropped 7.3 percent.

Director of commercial and cargo Ronald Lam said the decline in air freight demand along major trade lanes adversely affected cargo business in April.

"It declined in both volume and yield. Both are expected to remain difficult in the future. We will closely monitor the development of the US-China trade relationship and its impact on world trade flows," he said.

Cathay Pacific and Cathay Dragon carried 3.13 million passengers last month, an increase of 4.9 percent compared to April last year. The passenger load factor decreased 0.6 percentage points to 83.9 percent, while capacity, measured in available seat kilometers, increased by 8.1 percent.

Lam said the revenue growth in passenger business was due to the shift of the Easter holidays.

"The long Easter holiday stimulated demand and improved yield on short-haul routes. However overall yield for April still saw a year on year decline and the yield pressure is expected to continue in the coming months," he said.

In the first four months of 2019, the number of passengers grew by 4 percent while tonnage fell by 5.3 percent.

Passenger volume at Hong Kong International Airport rose 3 percent year-on-year to 6.5 million in April and flight movements increased 0.8 percent to 35,655, largely attributed to the Easter holiday falling in April compared to late March last year, which helped drive a 15 percent year on year rise in Hong Kong resident travel, according to Airport Authority Hong Kong. Cargo traffic remained weak due to uncertain global economic conditions. Cargo throughput dropped 8.1 percent to 394,000 tons in April, mainly due to 11 percent and 10 percent declines in imports and transshipments.

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