Releasing its latest traffic figures for August, the Cathay Pacific group faces an inevitable restructuring to protect the company, the Hong Kong (HKG) hub, and its employees, says its chief customer and commercial officer Ronald Lam.
“It is clear that we are facing a long and uncertain road to recovery. The entire aviation industry has been hit hard by COVID-19 and the environment will continue to be extremely challenging for many years,” he adds.
While noting that Cathay Pacific and Cathay Dragon carried 102,122 tonnes of cargo and mail in August, marking a decrease of 36.7 per cent compared to August 2019 and passenger numbers were down 98.8 per cent to 35,773 passengers last month, year-on-year, Lam highlighted the carrier was burning through cash at a rate of HKD 1.5 billion (USD 193 million) to HKD 2.0 billion per month, and will continue to experience significant cash burn until the market recovers.
This is occurring despite “decisive actions to reduce our costs,” Lam says. “The recapitalisation provides us time and a platform from which to transform our business and continue to operate in the short term; however, it is an investment that we need to repay.
“We are weathering the storm for now, but the fact remains that we simply will not survive unless we adapt our airlines for the new travel market. A restructuring will therefore be inevitable to protect the company, the Hong Kong aviation hub, and the livelihoods of as many people as possible. We continue to move forward with our comprehensive review of all aspects of the business, and will make our recommendations to the board in the fourth quarter on the size and shape of the company to allow us to survive and thrive in this new environment.”
The month’s revenue freight tonne kilometres (RFTKs) fell 30.3 per cent year-on-year while the carrier’s cargo and mail load factor increased by 14.2 percentage points to 75 per cent, while capacity, measured in available freight tonne kilometres (AFTKs), was down by 43.5 per cent.
In the first eight months of 2020, the tonnage fell by 33.5 per cent against a 34.4 per cent drop in capacity and a 26.5 per cent decrease in RFTKs, as compared to the same period for 2019.
The carrier also said that 40 per cent of its fleet – or 72 aircraft – will be parked outside Hong Kong, up from an earlier prediction of 60, as the airline requires fewer aircraft in the near term.