Cathay Pacific under pressure as cargo volumes fall

Cathay Pacific saw its cargo volumes decline in January, while it also warned that financial results will come under pressure.

The airline group handled cargo volumes of 151,964 tonnes in January, which represents a decline of 8.9% year on year.

Meanwhile, the cargo load factor for the month was down by 1.4 percentage points to 60.2%.

Traffic for the month would have been affected by the timing of the Chinese New Year, which was this year earlier than in 2019.

Meanwhile, the outlook is affected by the coronavirus outbreak which has seen the airline cut flights as demand to the Asia Pacific region plummets.

Cathay Pacific Group chief customer and commercial officer Ronald Lam said: ““We saw reasonably solid [cargo] demand across our network for the first three weeks of January. Our mainland China point of sales particularly stood out, recording year-on-year tonnage growth. By the last week of January, however, overall demand plummeted as manufacturing came to a halt in mainland China during the Chinese New Year holiday.

“The delay of the post-Chinese New Year resumption of manufacturing across mainland China has significantly affected both our Hong Kong and mainland China markets. However, demand elsewhere across our network remains buoyant, especially on trade lanes that have seen significant reductions in passenger capacity.”

He warned that the virus outbreak would be likely to affect its financial results.

“The first half of 2020 was already expected to be extremely challenging financially,” Lam said.

“As a result of this additional significant drop in demand for flights and consequential capacity reduction caused by the novel coronavirus outbreak, the financial results for the first half of 2020 will be significantly down on the same period last year.”

In releasing its traffic figures for January, the Oneworld carrier also announced further capacity cuts across its network – for February and March.

The carrier, along with its Cathay Dragon unit, will slash passenger capacity by 40%. This, the carrier notes, is an even deeper cut than the 30% capacity reduction it announced earlier this month.

While Hong Kong is the not at the epicentre of the coronavirus outbreak, travel restrictions imposed by some countries have also included Hong Kong. This, said Lam, led to a rise in cancelled bookings.

Since last year, Cathay has flagged a financially challenging first-half of 2020 amid the backdrop of local unrest.