Cathay Pacific will cut capacity as Hong Kong protests continue
Shares of Cathay Pacific opened down 1.6% in Hong Kong on Wednesday after the city’s flagship airline recorded yet another dismal month and said it would reduce capacity next year. But the stock reversed direction in mid-morning trade and was last up 0.2%.
The company is still trying to overcome months of protests in the Asian financial hub, which have deterred tourists and weighed heavily on the airline industry and other sectors.
Cathay said Tuesday afternoon that its inbound traffic to Hong Kong plunged 46% in November compared to a year ago. The airline and its Cathay Dragon subsidiary, which handles regional flights, also carried 9% less passengers last month than they did a year prior. That was the fourth straight month that passenger demand dropped.
“November continued to be very challenging for both Cathay Pacific and Hong Kong, with sentiment for travel still weak,” wrote Ronald Lam, chief customer and commercial officer for Cathay Pacific, in a filing with the Hong Kong Stock Exchange.
The company also decided to cut seat capacity next year by 1.4%, reversing an original plan to increase capacity by 3.1%. Lam said that’s the “first time in a long while” that Cathay will reduce its size.
It’s been a bad year for Cathay. In August, its former CEO and chief commercial officer resigned after several tumultuous weeks, during which the airline was heavily criticized by Chinese state media.
Although Cathay’s stock price is down nearly 20% from the high it touched in April, shares have rebounded somewhat this quarter.
Hong Kong’s airline and travel industries have been feeling the pain in recent months as the pro-democracy protests continue with no end in sight. The political crisis has compounded problems the city already faces, including a weak economic outlook and the US-China trade war.
Hong Kong Airlines, a smaller carrier, nearly lost its flying license earlier this month because of financial difficulties. And on Sunday Hong Kong International Airport reported that the number of passengers who passed through the airport plunged by 16.2% in November compared to a year earlier. That’s a drop of nearly one million people.
Hong Kong’s benchmark Hang Seng Index, of which Cathay is not a component, reversed opening gains and dipped 0.1%.
Elsewhere in Asia, markets were mixed Wednesday. Japan’s Nikkei and South Korea’s Kospi fell 0.4% and 0.1%, respectively. China’s Shanghai Composite was virtually unchanged.