Cathay cargo volumes under pressure as company issues profit warning

Cathay Pacific Cargo saw its airfreight volume declines deepen in June as urgent demand for personal protective equipment continued to ease.

The airline saw traffic in cargo and mail tonne km terms decline by 35.8% year on year to 596m in June, while cargo volumes were down 43.1% compared with last year to 93,228 tonnes.

Cargo load factors, meanwhile, were up 11.7 percentage points year on at 74.5%, but yields dropped after a “significant rise in May”.

Cathay Pacific group chief customer and commercial officer Ronald Lam said volumes were down on May’s levels.

“Despite a mild pickup in general airfreight movements, our cargo tonnage fell by 5% month-on-month as demand for medical supplies waned following a peak month in May,” he said.

“The reduction of long-haul carriage from the Chinese mainland and Hong Kong made way for movements from Southeast Asia and the Indian sub-continent as local lockdown measures eased.”

Cathay Pacific continued to operate a full freighter schedule as well as chartered flights from its all-cargo subsidiary, Air Hong Kong, in June, but there were fewer cargo-only passenger flights compared with May.

Earlier this week, Cathay Pacific’s shareholders passed the resolutions pertaining to the company’s HK$39bn recapitalisation plan.

However, the company today issued a profit warning: “The directors of Cathay Pacific Airways Limited estimate that for the six months ended June 30 2020, the Group will record a net loss attributable to shareholders of approximately HK$9.9bn, which compares to a net profit to shareholders of HK$1.3bn for the same period in 2019.”

This includes impairment charges amounting to approximately HK$2.4bn, which mainly relate to 16 aircraft that are unlikely to re-enter meaningful economic service again before the 2021 summer season together with certain airline service subsidiaries assets.

Elsewhere in Hong Kong, the airport saw its cargo volumes for June decline by 7.7% year on year to 357,000 tonnes.

The drop in cargo throughput was mainly attributed to the decline in transhipments resulting from reduced belly capacity on passenger flights.

Cargo throughput to and from mainland China and Southeast Asia saw the most significant decreases in June.

However, with demand for air cargo services remaining relatively strong, freighter movements increased 23.1% compared to the same month last year. Cargo exports recorded a year-on-year increase of 7%, with North American markets recording the most significant growth.