HONG KONG, 7 August 2003 — Hong Kong flag carrier Cathay Pacific said yesterday that SARS had a “devastating” impact on its business in the first half of the year, driving it into a net loss of 1.24 billion Hong Kong dollars ($159 million). The result, which was, however, at the lower end of analyst forecasts for Cathay Pacific Airways Ltd., reversed the year earlier profit of 1.41 billion Hong Kong dollars.
The airline slashed nearly half its flights at the height of the SARS outbreak, which paralyzed the regional tourism industry during the second quarter and brought Hong Kong to a near halt. Sales for the period dropped to 12.28 billion dollars from 15.51 billion dollars.
The company said it had a very strong first quarter but the outbreak of Severe Acute Respiratory Syndrome “had a devastating impact on passenger numbers in the second quarter.” Chairman James Hughes-Hallett said: “This was without a doubt the most challenging period in Cathay Pacific’s history. “The outbreak in mid-March of atypical pneumonia, or SARS, had a devastating impact on our passenger business,” he said, noting that at the height of the crisis, passenger numbers fell dramatically to below one fifth normal levels.
In April, the company issued its first-ever profit warning, parked 22 aircraft and then reduced its schedule by canceling up to half its normal services in May and June, Hughes-Hallett said in a statement.
Passenger revenue fell 29.5 percent compared with the same period last year and passenger yield dropped 5.7 percent, the company said. “The fact that we survived and are now able to work toward our recovery is due entirely to the admirable teamwork of our staff and management and our shareholders’ continued confidence in the company,” Hughes-Hallet said.
“We are progressively resuming services and helping to rebuild the tourism industry and local economy of Hong Kong.” He said the airline is now operating at 90 percent of its original passenger schedule as market conditions have strengthened, anticipating “a much improved performance” in the second half year.
Despite reduced cargo capacity due to the canceled passenger flights, demand for the company’s cargo services remained strong, particularly to its key markets in Europe and North America. The group’s cargo business carried 406,000 tons, up 5.2 percent on the same period last year, partly due to the integration of AHK’s European services since July 2002.
Hughes-Hallett said Cathay will continue with plans to grow its fleet, strengthen its network and enhance Hong Kong’s position as Asia’s leading aviation and logistics hub. Hong Kong was second worst SARS-hit region after China, with 297 dead from 1,755 infections. The territory was removed from the World Health Organization’s list of areas affected by SARS in June.
