February 17, 2020 / 8:55 AM / 2 months ago

Cathay Pacific flags 'significant' drop in first-half profit, capacity cuts due to coronavirus

FILE PHOTO: A passenger walks to the First Class counter of Cathay Pacific Airways at Hong Kong Airport in Hong Kong, China April 4, 2018. REUTERS/Bobby Yip/File Photo

(Reuters) - Cathay Pacific Airways (0293.HK) is expecting a significant drop in its first-half results and has also cut capacity due to the coronavirus outbreak, it said on Monday.

Severe travel restrictions as a result of a coronavirus outbreak in China, which has caused about 1,770 deaths across mainland China, have led to a steep rise in flight cancellations.

“The first half of 2020 was already expected to be extremely challenging financially,” the company said in a statement.

“As a result of this additional significant drop in demand for flights and consequential capacity reduction caused by the novel coronavirus outbreak, the financial results for the first half of 2020 will be significantly down on the same period last year.”

Flight cancellations have led the number of customers seeking refunds to skyrocket. The airline has told those affected, including some air show delegates, that reimbursement could take up to six weeks.

The carrier, which is the most exposed airline outside mainland China to a demand crunch related to the coronavirus, also said in a statement it had cut capacity by 40% for February and March, against an earlier planned 30% cut.

It also pointed to a likely reduction in April.

Cathay Pacific also posted a 1.3 percentage point decrease in the passenger load factor of Cathay Pacific and Cathay Dragon to 84.7% in January.

Meanwhile, Swire Pacific Ltd (0019.HK), Cathay’s largest shareholder, said it expects a hit to its first-half results owing to the capacity reductions by Cathay.

Reporting by Shreya Mariam Job in Bengaluru; Editing by David Evans and Jan Harvey

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