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Cathay anticipates worse second-half financial results

Hong Kong’s continued unrest has continued to hit Cathay Pacific hard in September as the carrier warned that it would likely report weaker financial results for the second half of the year.

Passenger load factor for the “challenging” month fell by 7.2 percentage points compared to the same month a year ago, with total passengers carried – by both Cathay and its subsidiary Cathay Dragon – falling 7.1% to just under 2.43 million.

Both load factor and passengers carried were also lower than August, when the airline saw load factors at 79.9%, and carried about 2.9 million passengers.

Inbound passenger traffic to the city fell a dramatic 38%, while outbound traffic was down 9% year-on-year.

The mainland China market saw the worst decrease in passenger numbers as RPKs fell 23.2%, making it the worst segment across its network.

Cathay’s chief customer and commercial officer Ronald Lam says the Chinese national day holiday period is traditionally a strong period for the carrier. This year, however, “the mainland China market has been hit especially hard.”

India was the “main bright spot” for the carrier, aided by strong demand for travel between India and North America.

He notes that transit traffic through Hong Kong remained relatively stable, but points out that the “increasing reliance on transit passengers over the short term” coupled with “intense competition…has continued to apply additional pressure on yield”.

The Oneworld carrier is working to adjust capacity for its winter schedules, as it notes a “significant shortfall” in inbound bookings for the remainder of the year. Lam says that this is most pronounced from China and Asian markets.

“Our expectation is that rest of 2019 will remain incredibly challenging for the airline and our second-half financial results are expected to be below those of our first-half,” he adds.

September marks the third straight month of weaker traffic Cathay has experienced, as anti-government protests continue in Hong Kong with no apparent end in sight.

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