Positive cargo revenues for Cathay as group makes an overall loss

By Rachelle harry and Alfred Chua

Hong Kong-based Cathay Pacific Group has highlighted the performance of its cargo division in its full-year 2020 financial results, as its overall performance was hit by the effects of the pandemic.

The group posted an operating loss of HK$18.1bn last year; in 2019, it achieved profits of HK$3.4bn. Group revenues declined 51.6% year on year to HK$46.9bn.

Cathay Pacific’s group chairman Patrick Healy commented: “The Cathay Pacific Group experienced the most challenging 12 months of its more than 70-year history in 2020. Since the onset of the pandemic, our passenger revenues in 2020 declined to only 2-3% of 2019 levels. With demand at an all-time low, we drastically reduced our passenger schedule to just a bare skeleton and our operating capacity remained below 10% for much of 2020.”

He added: “Our cargo business was by far the better performer, though it too was affected by the substantial contraction in capacity usually provided by the bellies of our passenger aircraft.”

Cathay Cargo achieved a 16.2% year-on-year increase in revenues to HK$24,573m and capacity, measured in available freight tonne km (AFTK), declined 35.5%. The carrier’s cargo load factor increased 8.9 percentage points to 73.3%. while yield increased by 58.3% to HK$2.96.

The carrier said its 2020 cargo results reflect the imbalance in the market between demand and available capacity.

“Yields increased and revenue improved due to the imbalance in the market between available capacity and demand,” the company said. “We increased cargo capacity by chartering services from our all-cargo subsidiary, Air Hong Kong, operating cargo-only passenger flights and carrying select cargo in the passenger cabins of some of our aircraft, and removing some seats in the Economy Class cabins of four Boeing 777-300ERs to provide further cargo space.”

The group’s passenger revenues in 2020 declined 84.3% year on year to HK$11,313m. 

Healy said 92 passenger aircraft (46% of its fleet) have been moved to Alice Springs in Australia and Ciudad Real in Spain for long-term storage. The number of aircraft that the carrier put into storage is higher than previously-reported figures. In August, it was reported that the group would move around 40% of its fleet into long-term storage overseas, as it adjusted its capacity downwards.

On the early aircraft retirements, Cathay did not disclose which aircraft these were, but noted that these aircraft were removed, as they were “unlikely to re-enter meaningful economic service again before they retire or are returned to lessors”.

The group also pushed back deliveries for Airbus A350-900 and -1000 aircraft by up to two years, from 2020-2021, to 2020-2023.

Similarly, deliveries for A321neos — some of which were originally meant for now-shuttered regional wing Cathay Dragon — were delayed from 2020-2023 to 2020-2025.

Cathay said that “advanced negotiations” are still ongoing with Boeing for the deferral of the 777-9 widebody, which it has 21 on order. The group had previously confirmed that the deliveries would be delayed to beyond 2025, and said it was still committed to the type.

The group, which also comprises low-cost unit HK Express and cargo subsidiary Air Hong Kong, ended the year with 239 aircraft in its fleet, an increase of three aircraft from what it started the year with.

 

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