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AVIATION | Staff Reporter, Hong Kong
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Air cargo slump may cut Cathay Pacific's rebound short

Blame lowered revenue guidance from the Taiwan Semiconductor Manufacturing Company.

Although embattled airline Cathay Pacific clocked in strong passenger traffic and load growth as a result of the Easter holiday in March, lowered revenue guidance from semiconductor giant may set its full-scale recovery back yet again, according to UOB Kay Hian.

Taiwan Semiconductor Manufacturing Company lowered its full-year revenue guidance amidst concerns about slowing smartphone demand. As the world’s leading operator of air cargo, Cathay Pacific stands to be adversely impacted.

This will be further aggravated a ban by the United States on component sales to ZTE Corporation which could lead to softer air cargo throughput in 2018.

“Weakness in cargo arising from the ongoing trade war between the US and China along with early signs of a potential slowdown in semiconductor shipments are key risks,” said analyst K Ajith. “CX is also vulnerable to interest rates, particularly with its net debt to equity elevated at 0.97x as at end-17 and also due to the fact that about 55% of its debt is on floating rates.”

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