Cathay Pacific announces profits of HK$1.35 billion for first six months of 2019 but warns HK protests have affected inbound bookings

08-Aug-2019 Intellasia | South China Morning Post | 6:02 AM Print This Post

Cathay Pacific Airways has beaten profit expectations with earnings of HK$1.35 billion (US$172 million) for the first six months of the year, the airline announced on Wednesday, but warned unrest in Hong Kong had hit inbound bookings.

Aided by a HK$1.2 billion fall in fuel costs and overall expenses, Hong Kong’s flagship carrier and one of Asia’s largest airline groups matched its highest profit expectations, the airline told the city’s stock exchange.

The company delivered its best revenue figures on record for the January to June period, of HK$53.5 billion, up 0.9 per cent.

Revealing its interim results, the airline’s chair John Slosar offered a modestly positive outlook for the second half of the year, stating the company’s performance would be better in the second half despite the US-China trade war and civil unrest in Hong Kong discouraging tourists.

The airline returned to the black after a HK$263 million half-year loss in 2018.

The attributable net profit matched the top estimate by one analyst, but among four analysts surveyed, the average net estimate was HK$857.7 million.

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

“The protests in Hong Kong reduced inbound passenger traffic in July and are adversely impacting forward bookings.”

Some familiar concerns continued to challenge the airline’s finances including strong competition from mainland Chinese carriers, prompting it to cut ticket prices in response.

Passenger yield, an indicator of how much money airlines made on air tickets, fell 0.9 per cent, which was blamed on pressure in the premium sector and long-haul economy class.

Falling revenue from the cargo business, down 11.4 per cent, was more than offset by an increase in passengers, as revenue from the passenger segment rose 5.6 per cent.

Overall costs were lower by 2.5 per cent thanks to the reduced fuel bill.

Some 17.48 million people flew with Cathay in the first half of this year. That is 776,000 more than during the same period in 2018, boosting revenue thanks to the use of larger aircraft to fly more passengers and refitting existing planes with extra seats in economy class.

The business carried 5.7 per cent less freight in the first half year-on-year, in a strong sign that the US-China trade war had hurt the airline’s once resurgent cargo business.

The airline was expected to release more details at a half-yearly press conference at 4pm on Wednesday, fronted by CEO Rupert Hogg. Cathay Pacific also announced an interim dividend of HK$0.18 per share.

The Cathay Pacific Group, one of Asia’s largest airline groups, comprises its flagship namesake brand, as well as Cathay Dragon and budget airline HK Express. It also controls Asia Miles, cargo airline Air Hong Kong and has an 18.13 per cent stake in Air China.

At the press conference, the airline was likely to be pressed by journalists on how the civil unrest in Hong Kong and the trade war would affect its business.

More details would also be sought over what Cathay will do with HK Express, which it bought for HK$4.93 billion and is now under the group’s control.

K Ajith, transport research director from brokerage firm UOB Kay Hian Asia, said weak visitor arrivals in the second half of the year remained “the biggest risk” for the airline, but the headwind was already priced into the company’s shares.


Category: Hong Kong

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