Cathay Pacific has decided to apply for the Hong Kong government’s wage subsidy program as it confronts the severe financial hit it has taken from the COVID-19 crisis.
The Hong Kong government will gain a minority stake in Cathay Pacific thanks to a massive bailout package, while the airline has committed to further wage savings and a sweeping overhaul of the group’s business strategy.
Cathay Pacific is accumulating huge losses as almost all of its flights remain suspended because of COVID-19, and the Hong Kong-based carrier sees little prospect of improvement in the near term.
Cathay Pacific shareholder Qatar Airways is willing to invest more in the Hong Kong airline, which is currently working on a restructuring plan to survive the COVID-19 crisis.
Hong Kong’s Cathay Pacific Group has further slashed its April capacity from its originally planned 4% to 3% after a dismal start to its April passenger traffic.
The Hong Kong Airport Authority (AA) has announced a HK$1 billion ($129 million) package of financial aid for the aviation sector but Cathay Pacific says more is needed to help carriers hard-hit by the coronavirus crisis.
Cathay Pacific Group’s April and May capacity will be reduced to just 4% of its normal total following plunging demand and a widening list of travel restrictions following the COVID-19 coronavirus pandemic.
Cathay Pacific Airways, which was one of the earliest airlines to be heavily affected by the COVID-19 pandemic, has moved to improve its liquidity situation with the sale and leaseback of six Boeing 777-300ERs.
Cathay Pacific Airways posted a net profit of HK$1.7 billion ($217 million) in 2019, down 28% year-over-year (YOY), as anti-government protests that began in June 2019 precipitated a significant decline in what is usually a stronger period for the airline.
Cathay Pacific Airways has asked its 27,000 employees to take three weeks of unpaid leave to “preserve cash,” as the Hong Kong-based carrier deals with the widespread Wuhan coronavirus in China, following seven months of anti-government protests that have severely affected the airline.
Cathay Pacific projects that its mainland China network will be almost completely suspended as a result of the novel coronavirus outbreak, dealing another blow to the carrier before it has recovered from a severe demand drop in 2019.
Cathay Pacific Group saw passengers carried for 2019 slip 0.7% year-on-year (YOY) to 134.4 million passengers, reflecting seven months of ongoing anti-government protests in Hong Kong.
Cathay Pacific Airways has agreed to temporarily take over its partner Air New Zealand’s (ANZ) Hong Kong flights, which will help ANZ cover for a shortage of international capacity.
