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Cathay Pacific ‘cautiously optimistic’ about cargo upturn

Despite earnings warning, Hong Kong’s Cathay Pacific thinks air freight will pick up thanks to a recent cooling in US-China trade tensions
Cathay pacific, Air freight, Air cargo

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Hong Kong’s Cathay Pacific said it its “cautiously optimistic” about its cargo operations given the recent reduction in US-China trade tensions.

The carrier’s chairman warned this week that it expects to see a “substantial loss” in earnings in H1 of 2020 because of the ongoing Covid-19 crisis.

Chairman Patrick Healy made the statement as Cathay Pacific published its full-year results for 2019.

Cargo revenue in 2019 was HK$21,154 million ($2.7 billion), a decrease of 14.2% compared to 2018.

“Cargo demand was depressed all year as a result of US-China trade tensions,” said Mr Healy.

“However, it did pick up later in 2019 during the traditional high season, reflecting new consumer product, specialist airfreight shipments and restocking ahead of holiday periods.

“Exports from mainland China and Hong Kong to trans-Pacific and European markets were more encouraging later in the year. Nevertheless, the cargo business performed significantly below expectations in 2019.”

Mr Healy added: “We expect our passenger business to be under severe pressure this year and that our cargo business will continue to face headwinds. However, we are cautiously optimistic about cargo following the recent reduction in US-China trade tensions and we have maintained our cargo capacity intact.

“The US dollar is expected to remain strong in 2020, and intense competition, especially in long-haul economy class, will continue to place significant pressure on yields.”

To boost the competitiveness of Hong Kong International Airport as a global cargo hub, the group announced in December it would introduce a new Terminal Charge concession effective 1 April 2020.

The reduction ranges from 18% to more than 20% compared with the current charge levels and is applicable to shipments from Hong Kong on all four of the group’s airlines.

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