Hong Kong’s ongoing protests leave Australian airline Qantas with a US$17 million profits slump
- Airline announced the grim forecast for Hong Kong sales and bookings, after more than four months of continual protests across the city
- The company in August downsized the aircraft used for its Hong Kong route, effectively cutting passenger capacity by 7 per cent – largely economy
Australia’s national airline Qantas announced a HK$134.1 million (US$17.1 million) hit to half-year profits as a result of Hong Kong’s ongoing unrest.
“Protests in Hong Kong will negatively impact the Group’s first half profit performance by A$25 million, with ongoing capacity reduction in place to minimise the second half impact,” the company said in a filing to the Australian Stock Exchange.
The company operates daily passenger flights to Hong Kong from Melbourne and Brisbane, and twice daily from Sydney. It also runs a freighter service between Sydney and Hong Kong via Cairns.
The airline, however, reported an overall 1.8 per cent rise in group revenue during the first quarter 2019-20, to A$4.56 billion (HK$24.47 billion). The uptick came on the back of a full-year 2018-19 18.7 per cent fall in underlying profit, to A$780 million.
Aviation body IATA urges Hong Kong to help airlines hit hard by protest crisis
Qantas also said a slowing global economy and lower demand for air freight would also cost the business up to A$30 million for the full 2019-20 financial year. The airline’s annual fuel bill was forecast to top A$4.05 billion, up 5.2 per cent from A$3.85 billion at the end of the last financial year.
Meanwhile last week, Cathay Pacific, the largest airline operator at Hong Kong International Airport (HKIA), unveiled its second straight decline in passenger numbers – down 7.1 per cent in September, following an 11.3 per cent drop in August.
Both months saw inbound travel collapse by 38 per cent.
Hong Kong’s flagship carrier warned of a “significant shortfall” in advanced bookings for the remainder of the year, which continued to be “incredibly challenging”. Analysts said the grim outlook could mean Cathay is on track to lose money for the third time in four years.
Cathay also downgraded its financial outlook, stating it would perform worse in the second half of the year than the first.
Demand for Hong Kong flights in smaller decline than expected during protests, American Airlines says
HKIA saw passenger traffic fall for the second consecutive month in September, declining 12.8 per cent – following a 12.4 per cent fall in August.
However, in recent weeks, airline industry figures have been less negative about the Hong Kong market.
American Airlines said its bookings had fallen less than expected thanks to brisk corporate and transit travel bookings. United Airlines said the drop in bookings in the Hong Kong market had stabilised more recently.
The size of the financial impact on Hong Kong may only be equivalent to 2 per cent of Qantas’ underlying profit in 2019, but reflects the cost to airlines and could shed light on the kinds of costs faced by the likes of Cathay Pacific and Hong Kong Airlines.
Airlines in Hong Kong are appealing to the government to waive airport charges and other costs to help them ride out the downturn in bookings.
A scheme announced on Tuesday by the government, offering travel agents a HK$100 million cash boost to subsidise outbound travel by HK$100 per person and each overnight visitor by HK$120 failed to meet the airlines’ expectations. In fact, with the scheme likely to raise commission fees for third-party travel agents, some have said it could end up costing airlines more.
