Cathay Pacific Cargo performs “below expectations”
11 / 03 / 2020
Cathay Pacific reported that its cargo division performed “below expectations” last year, with cargo revenues of HK$21.1bn – a 14.3% decrease on 2018 revenues.
Cargo revenue tonne km decreased by 6.7% to 11.3bn, volumes decreased by 6% to 2m tonnes and yields decreased by 7.9% to HK$1.87.
Load factor declined by 4.4 percentage points to 64.4% and capacity, measured in available cargo tonne km, decreased by 0.3% year on year to 17.5bn.
Cathay Pacific suggested that cargo demand was low last year as a result of the US-China trade war and lengthy protests in Hong Kong.
However, the carrier explained: “It did pick up later in 2019 during the traditional high season, reflecting new consumer product, specialist airfreight shipments and restocking ahead of holiday periods. Exports from Mainland China and Hong Kong to trans-Pacific and European markets were more encouraging later in the year.”
Cathay Pacific is operating a reduced winter schedule, in terms of freighter capacity, in response to low demand.
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In terms of freighter fleet, there was no change in numbers, with the carrier operating seven B747-400Fs and 14 B747-8Fs.
Subsidiary Air Hong Kong, however, got rid of a single A300-600F, bring its fleet to nine of the aircraft.
Reflecting on its cargo milestones set in 2019, Cathay Pacific highlighted its partnership with Lufthansa Cargo, established in April 2019, that was set up to facilitate shipments between Europe and Hong Kong.
Also in April 2019, Cathay Pacific became the first airline to receive IATA CEIV Fresh certification for its perishable cargo handling capabilities. In July, the carrier launched a fire containment bag that enables lithium-ion batteries to be flown safely on its freighter aircraft.
Turning its attentions to 2020, Cathay Pacific noted the impact of tho coronavirus (COVID-19). “It is difficult to predict when these conditions will improve,” it said.
As a result of COVID-1, Cathay Pacific explained that passenger demand has dropped “substantially”.
In response to the decline, the carrier has undertaken “a series of short-term measures”, it said, referring to reduced capacity on its passenger network.
However: “Despite these measures we expect to incur a substantial loss for the first half of 2020”.
The coronavirus caused factories to remain closed for an extended period after the Chinese New Year.
Following Chinese businesses coming back online, last week, airfreight rates from China increased rapidly, but spare capacity remains tight.
Meanwhile, Air Cargo News‘ sister title FlightGlobal reported that Cathay Pacific is considering operating cargo-only services on its passenger aircraft.
It is also in talks with Boeing and Airbus over possible deferral of aircraft deliveries this year, as the coronavirus outbreak leaves an impact on its fiscal performance.
At a briefing after Cathay released its annual results for 2019, chief operations and services delivery officer Greg Hughes confirmed that discussions were still continuing, writes FlightGlobal.
On the “prudent” move, Hughes adds: “We are not yet at a point in time concluding those discussions. We don’t yet have formal redelivery dates for when those aircraft will be delivered to us.”
Cathay Pacific Group was due to take delivery of 17 Airbus aircraft this year. Seven A350s were to go to Cathay, six A321neos to Cathay Dragon, and another four A320neos to low-cost unit HK Express. The aircraft will be a mix of owned and leased types, Cathay states.
Overall, for the year ended 31 December 2019, Cathay reported an operating profit of HK$3.4 billion, a dip of 4.3% year-on-year, following a worse-than-expected second-half result that was affected by political unrest in the territory.