Cathay returns to profitability

Business | Tereza Cai 8 Aug 2019

Cathay Pacific Airways (0293) said the recent social unrest affected ticket bookings last month, but it still forecasts business will further improve from last year after returning to profitability from red ink in its interim results.

"The protests in Hong Kong reduced inbound passenger traffic in July, and are adversely impacting forward bookings," chairman John Slosar said. "We expect the US dollar to remain strong. Fuel costs have recently weakened but we continue to expect fuel price volatility."

Cathay has seen a double-digit decline in ticket bookings to Hong Kong for the next two to three months, and a single-digit drop in the local customers' outbound tourism ticket bookings, said Paul Loo Kar-pui, chief customer and commercial officer.

Net profit for the Cathay group for the six months ended June 30 was HK$1.35 billion - rebounding from a HK$263 million loss for the same period last year.

Earnings per share were 34.2 HK cents, up 40.9 percent from the previous year. An interim dividend of 18 HK cents per share was declared, up from 10 HK cents.

Revenues for the first half grew 0.9 percent year-on-year to HK$53.547 billion.

"Our airlines normally achieve better results in the second half of the year than in the first half and, despite headwinds and other uncertainty, we expect this to be the case in 2019," Slosar said.

Loo added that given the rising uncertainties in the market, it is hard to predict whether peak season will be as usual or not, while stressing his confidence in Cathay's second-half performance.

The company also intends to recruit nearly 2,300 new staff in accordance with its expansion plan.

Passenger revenues were satisfactory, rising 5.6 percent to HK$37.45 billion, but overall yield declined due to intense competition in premium classes and long-haul economy class, along with adverse foreign currency movements.

Cargo business was weaker, with cargo revenue falling 11.4 percent from a year ago to HK$12 billion, due in part to US-China trade tensions.

Meanwhile, Cathay said it intends to preserve what is unique and special about Hong Kong Express, and keep it as a low-cost carrier, while at the same time broadening its network and maximizing synergies with the rest of the Cathay group.

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