Shares of Cathay Pacific Airways (0293) fell more than 5 percent yesterday despite weak oil prices, as oil hedging contracts were set at above US$60 (HK$468) per barrel, a level at which oil is unlikely to rebound within the year.
Chief financial officer Martin Murray had earlier said that losses from oil hedges would be US$7 million a month for every US$5 drop in oil prices. For the first three quarters of this year, Cathay Pacific has hedged 40 percent of its oil at US$64 per barrel. An analyst said the loss from oil hedges for the group would widen, but not be higher than in 2017, when it had 70 to 80 percent of hedged oil.
The airline's largest cost last year was oil, accounting for 28.4 percent of operational costs. From 2015 to 2017, it lost US$8.47 billion, US$8.46 billion and US$6.38 billion in oil hedges respectively. The company only lost US$101 million in 2019 and gained US$13 million in the second half of 2019 in oil hedges.
Meanwhile, the US Treasury Department disbursed US$2.9 billion in initial payroll assistance to 54 smaller passenger carriers and two major passenger airlines and finalized grant agreements with six major airlines.
Cathay ended 5.2 percent lower at HK$8.9 yesterday.
