Cathay Pacific Sees Trade War, Hong Kong ProtestsĀ as Damaging to Business
(Bloomberg) -- Cathay Pacific Airways Ltd. said geopolitical and trade tensions are likely to damage the business after the airline rebounded to a profit in the first half.
- Protests in Hong Kong cut inbound passenger traffic in July and are āadverselyā affecting bookings, Cathay said in a statement Wednesday. First-half net income was HK$1.35 billion ($172 million) compared with a year-ago loss of HK$263 million.
Key Insights
- With some companies advising staff to put off travel to Hong Kong, Cathay's second-half performance could come under further pressure. Cathay canceled more than 150 flights as a general strike shut down the city on Monday. Australia on Aug. 6. warned travelers to Hong Kong to āexercise a high degree of caution.ā
- Impact from the U.S.-China trade war could hit Cathay more in the second half as the peak season for air freight falls in the fourth quarter. Cathay is Asia's biggest cargo airline and the business accounts for about a quarter of its revenue.
Market Reaction
- Cathay shares traded up 0.4% at HK$10.36 as of 1:11 p.m. in Hong Kong. The airline's first-half profit beat the HK$1.1 billion average estimate from three analysts.
- Cathay stock is down 7% this year while the Hang Seng Index is little changed.
Get More
- āGeopolitical and trade tensions are expected to continue to affect the global economy and, in turn, demand for air travel and air freight,ā Cathay Chairman John Slosar said in the statement.
- Passenger yields -- a gauge of money earned from flying one customer one kilometer -- fell 0.9% and cargo yields slipped 2.6%.
- Cathay is on the last leg of a three-year transformation program to reduce costs and improve Hong Kong's status as a transit hub in the face of rivals in China.
To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Angus Whitley, Ville Heiskanen
Ā©2019 Bloomberg L.P.
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