Cathay Pacific expects 'significant' drop in H1 profit as virus outbreak curbs travel demand

The airline said that a drop in demand, caused by widespread travel restrictions, has led it to cut capacity on many routes

Cathay Pacific Airways is forecasting a "significant" drop in its first half results as the coronavirus outbreak led to widespread travel curbs. Bloomberg

Cathay Pacific Airways is expecting a significant drop in its first-half results and has also cut capacity due to the coronavirus outbreak, it said on Monday.

Severe travel restrictions as a result of a coronavirus outbreak in China, which has caused about 1,770 deaths across mainland China, have led to a steep rise in flight cancellations.

"The first half of 2020 was already expected to be extremely challenging financially," the company said in a statement.

"As a result of this additional significant drop in demand for flights and consequential capacity reduction caused by the novel coronavirus outbreak, the financial results for the first half of 2020 will be significantly down on the same period last year."

Flight cancellations have led the number of customers seeking refunds to skyrocket. The airline has told those affected, including some air show delegates, that reimbursement could take up to six weeks.

The carrier, which is the most exposed airline outside mainland China to a demand crunch related to the coronavirus, also said in a statement it had cut capacity by 40 per cent for February and March, against an earlier planned 30 per cent cut.

It also pointed to a likely reduction in April.

Cathay Pacific also posted a 1.3 percentage point decrease in the passenger load factor of Cathay Pacific and Cathay Dragon to 84.7 per cent in January.

Meanwhile, Swire Pacific, Cathay's largest shareholder, said it expects a hit to its first-half results owing to the capacity reductions by Cathay.