Cathay bookings hit by protests

Cathay Pacific Airways is facing a decline in forward bookings for travel to Hong Kong “in the region of double digits” due to widespread protests in the Asian financial centre, a senior company executive said.

There is also some weakness in outbound traffic, chief customer and commercial officer Paul Loo said, adding that transfer traffic had been hit less but that the overall situation was placing pressure on average fares.

His comments came after Cathay swung to its first profit for the January-June period since 2016 and said the second half was likely to be better.

The airline reported an HK$1.347bn (€153m) net profit for the six months ended June 30, compared with an HK$263m loss for the first half of 2018.

Rising passenger revenue and lower fuel costs helped to offset a decline in the air cargo market linked to the U.S.-China trade war.

Cathay is a bellwether for Hong Kong’s economy, which grew less than expected in the second quarter as mass anti-government protests rocked the territory.

The airline said protests reduced inbound passenger traffic in July and were impacting forward bookings. The carrier cancelled dozens of flights on Monday due to a general strike.

Chairman John Slosar said people were taking a “wait and see” attitude before booking flights. “The fact forward bookings are down doesn’t mean those bookings are gone. People just aren’t booking as far out as they were before.”

But Cathay said it normally achieved better financial results over July-December and, despite headwinds and other uncertainties, it expected that to be the case in 2019. “We believe this removes a key earnings concern,” Jefferies analyst Andrew Lee said in a note, maintaining a buy rating.

Over a 10-year period, Cathay’s second-half profit has averaged double or more than the first half due to seasonal differences, Slosar said. Cathay is forecast to report a full-year profit of HK$4.3bn, according to an average of 18 analyst estimates compiled by Refinitiv.

Cathay’s first-half revenue rose 0.9% to HK$53.55bn at a time when passenger capacity increased by 6.7%.

Passenger yields, a measure of the average fare per kilometre flown, fell 0.9% in the first half due to competition in premium classes and long-haul economy class.

Cargo revenue fell 11.4%.

Hong Kong is the world’s largest air freight hub and Cathay receives a higher proportion of revenue from cargo than peers like Singapore Airlines and Qantas Airways