Cathay Pacific freezes new hiring, to focus on cost cuts

Cathay last month swung to its first profit for the January-June period since 2016. (File/Reuters)
Updated 12 September 2019

Cathay Pacific freezes new hiring, to focus on cost cuts

  • Cathay has said it will cut capacity for the upcoming winter season after reporting an 11.3% fall in passenger numbers for August
  • The weak demand and cuts to capacity will heap more pressure on Cathay and its new management

HONG KONG: Cathay Pacific Airways Ltd. has put a freeze on new hiring, according to an internal memo seen by Reuters, as the airline battles a slump in demand from fliers avoiding Hong Kong amid massive anti-government protests in the city.
In a memo to staff on Wednesday evening, new Chief Executive Augustus Tang said he had asked executives to examine spending and focus on cutting costs. The airline will also not replace departing employees in non-flying positions unless approved by a spending control committee, he said.
Cathay has said it will cut capacity for the upcoming winter season after reporting an 11.3% fall in passenger numbers for August. The airline does not expect September to be any less difficult, while analysts have projected it could swing to a loss in the second half.
Cathay shares fell 2.4% early on Thursday, lagging the benchmark Hang Seng Index that was down 0.4%.
The weak demand and cuts to capacity will heap more pressure on Cathay and its new management, appointed after CEO Rupert Hogg quit last month in a shock move and the resignation of Chairman John Slosar last week.
Cathay, which is trying to complete a three-year financial turnaround plan, has become the biggest corporate casualty of the Hong Kong protests after China demanded it suspend staff involved in, or supporting, the demonstrations that have plunged the former British colony into a political crisis.
Jefferies analyst Andrew Lee told clients he expected the airline could swing to a HK$973 million ($124.1 million) loss in the second half of the year. BOCOM International analyst Luya You said second-half earnings could be “notably dismal.”
Cathay last month swung to its first profit for the January-June period since 2016 and said at the time that the second half was likely to be better as usual due to seasonality.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 09 August 2020

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

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Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.