Hong Kong protests clipped Cathay’s wings in third quarter, parent Swire Pacific says as it issues profit warning
- Overall profit for 2019 is still expected to be substantially above that of 2018
- Protests have continued to affect Cathay’s passenger traffic, forward bookings
Swire Pacific, parent company of Hong Kong carrier Cathay Pacific, said on Thursday it expected to post a lower recurring profit for this year, mainly because of poor results at the airline, which has been adversely affected by about five months of anti-government protests in the city.
“The company’s consolidated recurring underlying profit for 2019 is expected to be below that of 2018,” it said in a filing to the Hong Kong bourse after the stock market closed on Thursday. “The expected results of Cathay Pacific are the principal reason for this,” it added.
However, after taking into account HK$13.4 billion (US$1.7 billion) in investment property disposal gains in the year’s first seven months and other non-recurring factors, overall profit for 2019 is still expected to be substantially above that of 2018.
Swire Pacific, one of Asia’s largest and oldest conglomerates controlled by the British Swire family, posted 40 per cent year-on-year growth in underlying profit to HK$4.23 billion in the year’s first half, with Cathay turning in an interim net profit of HK$1.35 billion – a turnaround from a loss of HK$263 million last year.
But Cathay’s fortunes have rapidly deteriorated in the past few months, with passenger throughput falling 11.3 per cent year on year in August and by 7.1 per cent in September. Its September inbound traffic dived 38 per cent from a year ago, as travellers were deterred by the city’s increasingly violent protests, some of which took place at the airport.
The steep falls pared the airline’s accumulated throughput growth to a mere 1.3 per cent for the year’s first nine months, from 4.4 per cent in the first six months.