Cathay Pacific suffers $21.6b loss amidst pandemic

Recovery remains uncertain as the aviation sector sees return of global passenger traffic to normal level in 2024.

The Cathay Pacific Group recorded a $21.6b attributable loss in 2020, down from its $1.69b profit in the previous year as the COVID-19 pandemic disrupted its operations.

The group’s attributable loss amounted to $ 11.8b in the second half, worse than the $9.9b loss in the first half of 2020 and lower than the $344m profit in the same period in 2019. This is equivalent to a 424.3 cents loss per ordinary share in 2020.

“Like the rest of the aviation sector, Cathay Pacific has keenly felt the impact of this crisis, and our financial results for 2020 reflect this,” Cathay Pacific chairman Patrick Healy said, citing projections of the International Air Transport Association (IATA) that global passenger traffic will unlikely return to its pre-pandemic levels until 2024.

According to the IATA, global passenger traffic was reduced 66% compared to 2019, whilst global cargo decreased by 11%.

The loss resulted from the $2.68b COVID-19 government grants across the globe, offset by some $4.05b impairment of 34 aircrafts, and $3.97b restructuring cost, inclusive of a $1.59b write off of a deferred tax asset at Cathay Dragon.

The group's restructuring in October 2020 led to the displacement of 8,500 workers and the discontinuation of Cathay Dragon by the end of 2020. It also involved signing new contracts with 98.5% of its pilots and 91.6% of its cabin crew.

This led to a $500m worth of monthly savings, reducing month cash burn to $1b-$1.5b from $1.5-$2b.

“Whilst we are now well-positioned following the recapitalisation and restructuring, I want to stress that our cash-preservation measures must continue unabated,”  Healy said. “The pace of recovery remains highly uncertain and the Group is still very much in survival mode.”

Passenger revenues in 2020 dropped to only 2%-3% of its 2019 levels as it carried only over 13% of the passengers carried before the pandemic. The airline’s capacity and revenue passenger kilometres also declined by 78.8% and 85.1%, respectively.

Meanwhile, cargo performed well as it brought a record $24.6b in revenues, up from 16.2% in 2019, even as Cathay’s capacity was down by over 35%.

The group has maintained that in the first half of 2021, it will operate at 25% of its pre-pandemic capacity and at 50% in the full year, despite the presence of challenges as new strains of COVID-19 emerge.

“The mass rollout of vaccines worldwide is encouraging, but the pace of recovery in demand for travel remains highly uncertain,” Healy said.