Cathay Pacific on Monday warned that the coronavirus outbreak in all likelihood is going to "significantly" bite into its first-half results. The deadly coronavirus has finally started impacting businesses with companies suspending operations and airline companies witnessing massive booking cancellations and drop in passenger traffic.
Cathay Pacific, which is Hong Kong's de facto flag carrier, said that it saw a significant drop in passenger traffic in January said and had to cancel hundreds of its flights departing from arriving into China. Coronavirus outbreak has posed as a challenging time for companies operating in mainland China.
Cathay Pacific feels the pain
Cathay Pacific, Hong Kong's flagship airline company, said that its year-over-year financial performance in the first half of 2020 will be "significantly down" owing to the deadly coronavirus outbreak. The company also said that it will continue flights cancellations into April.
Cathay Pacific said that it had cut capacity by 40% in February instead of 30% as planned earlier. The company's chief customer and commercial officer Ronald Lam Siu-por in a statement said, "The first half of 2020 was already expected to be extremely challenging financially." Cathay Pacific also witnessed a 1.3% decline in passenger load for Cathay Pacific and Cathay Dragon to 84.7% in January.
Not an easy time
Cathay pacific has been reducing flights since the Lunar New Year when the first cases of croronavirus started getting reported. "Travel demand dropped substantially as the novel coronavirus outbreak in mainland China intensified towards the end of the holiday period," said Lam Siu-por.
The deadly Coronavirus has claimed 1,770 lives till Monday. Moreover, thousands of people have been quarantined to their homes. This has seen most countries putting travel restrictions on their citizens. All airline companies, with flights flying in and out of China have been suffering with Cathay pacific bleeding the most.
The airline company also blamed the governments of other countries that have imposed travel restrictions on its citizens to China and in some cases even Hong Kong for the decline in passenger traffic. At the same time, passengers who have been cancelling tickets are also demanding refunds, which is likely to further impact the company's profits.
The airline said that these reimbursements could take up to six weeks. Cathay Pacific had earlier urged all its 27,000 employees to avail unpaid leave in order to stock more cash so that it could meet the losses owing to the cancellation of flights and decline in passenger traffic.