|Bid||7.290 x 0|
|Ask||7.300 x 0|
|Day's range||7.260 - 7.480|
|52-week range||7.260 - 12.360|
|Beta (5Y monthly)||1.01|
|PE ratio (TTM)||16.98|
|Earnings date||12 Aug 2020|
|Forward dividend & yield||0.38 (5.21%)|
|Ex-dividend date||04 Sep 2019|
|1y target est||14.01|
(Bloomberg Opinion) -- You might not have thought it three months ago, when the spread of Covid-19 forced Qantas Airways Ltd. to halt international flights and drove its shares to their biggest percentage drop in eight years. But a global pandemic could wind up being good news for the company.Australia’s dominant airline is now something close to a monopoly player. Virgin Australia Holdings Ltd., its erstwhile local rival, went into administration in April. While limited flights are still operating, it’s unlikely to offer aggressive competition until a rescuer comes along, and possibly some time after that. That’s a fortunate position to be in. For carriers around the world, domestic operations tend to do better than international ones, since competition is usually weaker while shorter distances offer productivity benefits. This advantage is accentuated by the coronavirus, which has more or less shut down cross-border aviation on a global basis.Few carriers have as impressive a redoubt as Qantas can boast in Australia. Just a handful of domestic markets are larger in terms of passenger traffic. Of those, only India and Japan have an airline on a par with Qantas in terms of dominance, and most have suffered far worse from the virus.The company’s position is likely to be further solidified by a A$1.9 billion ($1.3 billion) capital raising announced Thursday. If you think this is some sort of desperate rescue move, have a look at the slim discount — just 3.3% or so to the previous day’s share price, once you account for dilution from issuing new stock.The advantage for airlines in the current crisis is that while the industry’s fixed costs are famously high, a lot of them aren’t nearly as fixed as the term would suggest. About 60% goes toward fuel, route and landing fees, as well as maintenance and depreciation, which is only incurred to the extent that flights are actually operating. The A$8.2 billion that Qantas expects to save over the coming 12 months amounts to about half of typical annual costs. Only A$600 million of the total will come from the difficult business of restructuring, with most of the savings resulting from simple expedients like burning less fuel.The international business that will be most severely hit accounts for less than 20% of profit in a good year, despite making up nearly half of Qantas’s seat capacity. Resisting the temptation of unprofitable overseas expansion is a strategy we’ve long urged on Chief Executive Officer Alan Joyce.Idling its gas-guzzling, hard-to-fill A380s — another measure announced Thursday — is also long overdue. Qantas shareholders have a habit of welcoming fleet writedowns, like the charge of up to A$1.4 billion that will result from that decision. In both areas, the coronavirus is providing the perfect opportunity to do what Qantas should have been doing anyway.Getting through the coming years isn’t going to be a cakewalk. Australia still needs international flights, but capacity on that front is expected to be half of typical levels in the year through June 2022. Even so, the country stands a good chance of returning to something resembling normal domestic aviation traffic sooner than any other major airline market, with the possible exceptions of China and Japan. Unlike Asian rivals that have been raising cash to make it through the pandemic, such as Cathay Pacific Airways Ltd., Korea Air Lines Co., and Singapore Airlines Ltd., Qantas has a substantial domestic market to fall back on while cross-border aviation is in hibernation. And unlike its U.S. rivals, such as American Airlines Group Inc., Southwest Airlines Co., and United Airlines Holdings Inc., it faces neither fierce competition nor a profound disease burden at home.No airline would wish the coronavirus crisis on itself, but Qantas is better placed than most to ride out this epidemic. “Qantas never crashed,” as Dustin Hoffman’s character once said in “Rain Man.” That looks to be as true now as it was then.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- After surging the most in more than a decade, Cathay Pacific Airways Ltd. shares reversed course and closed down 1%, a day after the carrier unveiled a $5 billion government-backed plan to rescue it from collapse.Cathay soared 19% in pre-market trading in Hong Kong, but then faltered almost as soon as the regular session began. Traders said a rush to cover short positions was behind the biggest move in company shares since 2008. Trading was halted Tuesday before the HK$39 billion lifeline from the Hong Kong government, Swire Pacific Ltd. and Air China Ltd. was made public.Analysts welcomed the proposed recapitalization--which includes the issuance of preference shares, rights and the extension of a bridge loan--but warned that longer-term challenges remain for the Hong Kong carrier as it continues to hemorrhage as much as HK$3 billion a month because of Covid-19 travel curbs.While the plan eases concerns over Cathay’s liquidity, the recovery outlook is “dim,” and its monthly cash burn likely will remain high, Credit Suisse Group AG said as it downgraded the stock to the equivalent of sell. Daiwa Securities Group Inc. also lowered its rating to sell, saying minority shareholders will be diluted by Cathay’s issuance plans.Cathay has dropped 24% this year, just outperforming a Bloomberg gauge of Asia Pacific airlines, which is down 25% after the pandemic destroyed travel demand. Short interest in Cathay shares was about 13% of free float as of Monday, according to IHS Markit Ltd. data.The International Air Transport Association said Tuesday airlines are expected to lose $84.3 billion this year, with revenue projected to slump 50% to $419 billion.“Financially, 2020 will go down as the worst year in the history of aviation,” said the industry group’s Director General Alexandre de Juniac said. “On average, every day of this year will add $230 million to industry losses.”Cathay said the plan is designed to provide sufficient funds to survive the industry downturn and allow the airline to begin transforming its business. Chairman Patrick Healy, who warned that the business would collapse without the recapitalization, also said the airline will cut executives’ salaries and offer more unpaid leave to its workers. Job cuts are possible.The recapitalization plan will secure Cathay’s survival but dilute earnings per share by as much as 43%, Bloomberg Intelligence analysts James Teo and Chris Muckensturm said.“Shareholders subscribing to its rights issue face 6% dilution if warrants are fully exercised,” they said. “An offering of preferred shares may result in a HK$585 million annual dividend paid to the Hong Kong government, leaving less for other shareholders.”Prior to the pandemic, Cathay already faced enormous financial strain due to Hong Kong’s anti-government protests, which affected traffic numbers and led to the exit of the company’s former chief executive officer. Passenger revenue is only about 1% of prior year levels.The airline posted an unaudited loss of more than HK$2 billion in February alone, and since then it has been losing HK$2.5 billion to HK$3 billion a month. Its main shareholders Swire Pacific, Air China and Qatar Airways have undertaken to vote in favor of all resolutions for the recapitalization plan.“Financially, this gives them probably enough for a year to two years,” Sobie Aviation’s Brendan Sobie told Bloomberg Television on Wednesday. “This is just one step to survive the crisis.”He said the plan was the best scenario for those involved and maintains the shareholding balance for Swire Pacific, Air China and Qatar Airways. It also helps preserve Hong Kong’s position as an aviation hub. Next, Cathay will have to make strategic decisions on fleet size, capacity and other areas to align with an international market that will take time to recover.Healy said “tough decisions” would need to be made in fourth quarter to get the airline to the right size and shape to compete effectively, and that “nothing is off the table” in terms of what needed to be done.The company may access equity and debt capital markets again to strengthen its balance sheet if conditions are right, Healy said.“The fund-raising gives Cathay about 13 to 16 months of liquidity,” said Paul Yong, an analyst at DBS Group Holdings Ltd. in Singapore. “But short-term profitability remains highly challenged because the rate of the international travel market opening is happening slowly and cautiously. Also there is social unrest in Hong Kong.”Coronavirus-related travel restrictions have put immense pressure on airlines globally, and none are certain about how the future will pan out as new travel requirements come into force and travelers’ attitudes change.Cathay and its Cathay Dragon unit have been operating a “bare skeleton” passenger service since April after slashing capacity by 96% and cutting their route networks. Hong Kong Express, the budget carrier Cathay acquired last year, said Wednesday it will gradually resume flight operations from July 12.“Cathay’s dominance in Hong Kong was strengthened by its acquisition of HK Express last year, which should serve it well as the city remains a key Asian financial and trade hub,” Bloomberg Intelligence’s Teo and Muckensturm wrote in a note.Air traffic is likely beyond the worst of its collapse, provided there isn’t a second, more damaging wave of the virus, according to IATA. At its lowest point in April, global air travel was about 95% below 2019 levels, and passenger numbers this year will likely slide to 2.25 billion, which is roughly the same as 2006 levels, it said. Costs, meanwhile, aren’t falling as fast as demand.“That’s why government financial relief was and remains crucial as airlines burn through cash,” IATA’s de Juniac said. “The challenge for 2022 will be turning reduced losses of 2021 into the profits that airlines will need to pay off their debts from this terrible crisis.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of Cathay Pacific Airways Ltd <0293.HK> surged as much as 18.7% on Wednesday, reaching their highest level since Feb. 24, after the carrier announced a HK$39 billion ($5 billion) recapitalisation plan led by the Hong Kong government. "There are still many uncertainties in the second half of the year as the pandemic is still ongoing," said Linus Yip, chief strategist at First Shanghai Securities. The rescue package includes a HK$11.7 billion rights issue to existing shareholders, led by Swire Pacific <0019.HK> and Air China <601111.SS>.
Cathay Pacific Airways Ltd <0293.HK> said it expects to repay the Hong Kong government for HK$19.5 billion (1.98 billion pounds) of preference shares over a three to five year period. The shares are part of a $5 billion recapitalisation package announced on Tuesday to help the airline weather the coronavirus crisis, which the International Air Transport Association estimates will cost the industry a record $84 billion in 2020. "We would certainly be expecting to repay that over a 3-5 year period," Chief Financial Officer Martin Murray said in an analyst briefing posted to the airline's website late Tuesday.
(Bloomberg) -- Cathay Pacific Airways Ltd. became the latest global carrier to receive a lifeline to get through the coronavirus pandemic, with the chairman saying its plan to raise HK$39 billion ($5 billion) from the Hong Kong government and shareholders was necessary to avoid collapse.The beleaguered airline will sell HK$19.5 billion of preference shares along with HK$1.95 billion of warrants to the government. It also proposed a rights issue, reported earlier Tuesday by Bloomberg News, to raise about HK$11.7 billion. The plans are subject to shareholder approval at an extraordinary general meeting around July 13.A government-connected entity called Aviation 2020 Ltd. also is extending a HK$7.8 billion bridge loan, the carrier said. The government will own 6.08% of Cathay through Aviation 2020 after the deal and have two observers on its board. The airline will cut executives’ salaries and offer more unpaid leave to its workers, and job cuts are possible.“The reality is that the recapitalization plan announced today is basically the only plan available to Cathay Pacific,” Chairman Patrick Healy said. “The alternative would have been a collapse of the company.”Airlines around the world have been searching for funds after the coronavirus wiped out passenger demand and grounded fleets. Governments have devoted more than $85 billion to propping up the industry, including the major U.S. carriers and Germany’s Deutsche Lufthansa AG, which secured about $10 billion in state support. Even so, global air traffic may only get back to 50% to 60% of usual levels by year-end.“With the participation of the Hong Kong government in its capital reorganization, the firm will be kept out of troubles like a cash squeeze at least in the coming months, and both its financial strength and credit rating will get a boost,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd.Cathay and main shareholders Swire Pacific Ltd. and Air China Ltd. suspended trading Tuesday, pending the announcement, and will resume Wednesday. Air China owns about 30% of Cathay, while Swire Pacific has a 45% stake. Qatar Airways holds 9.99%. All three have undertaken to vote in favor of all resolutions for the recapitalization plan.Cathay posted an unaudited loss of more than HK$2 billion in February alone, and since then it has been losing HK$2.5 billion to HK$3 billion a month.“Tough decisions will need to be made in the fourth quarter of this year to get Cathay Pacific to the right size and shape in which to compete successfully,” Healy said. “Nothing is off the table.”The company may access equity and debt capital markets again to strengthen its balance sheet if conditions are right. Cathay shares are down 24% so far this year.The airline announced a new round of pay cuts and more unpaid leave for staff. Over 25,000 employees already agreed to an unpaid leave program in February that required them to take three weeks off between March 1 and June 30.The acceptance rate was lower for crew and pilots, the most expensive employees, a person familiar with the plans said at the time.Healy and Chief Executive Officer Augustus Tang will take a 30% pay cut, and other executives as much as 25%. Other employees will be offered three weeks of unpaid leave to be taken over six months.“These funds, along with other efforts like selling some of their planes and possible job cuts, could help tide them over for about 2 years,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics in Malaysia. “But the long-term view of Cathay remains uncertain.”Cathay isn’t alone in seeking help. In Asia, Singapore Airlines Ltd. raised S$8.8 billion ($6.3 billion) in a rights issue last week and has since secured new credit lines and loans, while South Korean authorities are pumping another 1 trillion won ($834 million) into Korean Air Lines Co., Yonhap News said.Others such as Avianca Holdings SA and Latam Airlines Group SA filed for bankruptcy, while administrators are looking at bidders for Virgin Australia Holdings Ltd. after it collapsed in April.The International Air Transport Association last month said the global airline industry’s debt could swell by 28% to $550 billion this year, which includes $123 billion in financial aid from governments. The industry group expects airlines to burn through about $60 billion of cash in the second quarter alone.The pandemic hit Cathay particularly hard because -- like Singapore Airlines -- it has no domestic market to fall back on, whereas carriers in China are rebuilding capacity on flights within the mainland. Passenger revenue is about 1% of prior year levels, Cathay said.Even before the pandemic, Cathay was under enormous financial and political strains as it found itself caught up in the Hong Kong anti-government protests, which affected traffic numbers and led to the exit of the company’s former chief executive officer. Cathay was criticized by China, protesters and its own workers for its response to the demonstrations.Hong Kong has reported a total of 1,107 confirmed coronavirus cases and four deaths, according to Johns Hopkins University data. Globally, infections have reached more than 7.1 million with more than 400,000 deaths.Cathay and its Cathay Dragon unit posted an unaudited net loss of HK$4.5 billion in the first four months of the year as their route network shrank to just 14 destinations.In April, the two carriers combined flew only 458 passengers a day, on average, and Cathay warned that international travel demand will take a few years to recover. Cathay also owns Hong Kong Express, a budget carrier that has grounded its fleet since March.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Hong Kong will lead a $5 billion rescue of Cathay Pacific Airways, which like other airlines has been hit by a global travel slump triggered by the coronavirus pandemic. The government's involvement in the recapitalisation follows the double blows of Hong Kong's political unrest and the coronavirus outbreak, which Cathay said meant it was burning through about HK$3 billion ($387 million) a month in cash. Cathay has grounded most of its planes, flying only cargo and a skeleton passenger network to major destinations such as Beijing, Los Angeles, Sydney and Tokyo.
(Bloomberg) -- Embattled Hong Kong carrier Cathay Pacific Airways Ltd. and its two main shareholders, Swire Pacific Ltd. and Air China Ltd., suspended trading of their shares Tuesday pending an announcement.The move comes as Cathay contends with a slump in traffic brought on by the coronavirus outbreak and the travel restrictions that ensued. The curbs hit Cathay particularly hard because it has no domestic market to fall back on, whereas carriers in China are rebuilding capacity on flights within the mainland.Even before the pandemic, Cathay was under enormous financial and political pressures as it found itself caught up in the Hong Kong anti-government protests, which affected traffic numbers and led to the exit of the company’s former chief executive officer. Cathay was criticized by China, protesters and its own workers for its response to the demonstrations.Air China has owned about 30% of Cathay for more than a decade, while Swire, one of the last remaining British trading companies based in Hong Kong, has a 45% stake. Qatar Airways has a 9.99% holding.Cathay could be planning to raise funds via a rights issue backed by Swire and Air China, said Justin Tang, head of Asia research at United First Partners. He also said there’s been speculation that Air China may propose a takeover by buying Swire’s stake.Cathay Pacific’s Crisis Puts Focus on Air China’s Next Move Cathay and its Cathay Dragon unit posted an unaudited net loss of HK$4.5 billion ($581 million) in the first four months of the year as their route network shrank to just 14 destinations. In April, the two carriers combined flew only 458 passengers a day, on average, and Cathay warned that international travel demand will take a few years to recover. Cathay also owns Hong Kong Express.The coronavirus has hurt airlines the world over. Singapore Airlines Ltd., which like Cathay doesn’t have a domestic market to speak of, raised S$8.8 billion ($6.3 billion) in a rights issue last week and has followed that by securing new lines of credit and loans to further bolster its finances. Morgan Stanley said the rights issue alone should provide enough liquidity to see the airline through the fiscal year.The International Air Transport Association last month said the global airline industry’s debt could swell by 28% to $550 billion this year, with carriers expected to burn through about $60 billion of cash in the second quarter alone.(Updates with comment from analyst and background on Cathay’s performance beginning fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
China's aviation regulator may make it difficult for Hong Kong's Cathay Pacific Airways Ltd to merge regional arm Cathay Dragon into its main brand because of infractions during last year's pro-democracy protests, two sources said. The airline is looking to cut costs, streamline marketing and consolidate pilot contracts around Cathay Pacific and low-cost arm HK Express, the sources said on condition of anonymity. Rival Singapore Airlines Ltd is doing the same with regional arm SilkAir and budget arm Scoot.
China's aviation regulator may make it difficult for Hong Kong's Cathay Pacific Airways Ltd <0293.HK> to merge regional arm Cathay Dragon into its main brand because of infractions during last year's pro-democracy protests, two sources said. The airline is looking to cut costs, streamline marketing and consolidate pilot contracts around Cathay Pacific and low-cost arm HK Express, the sources said on condition of anonymity. Rival Singapore Airlines Ltd <SIAL.SI> is doing the same with regional arm SilkAir and budget arm Scoot.
Today is shaping up negative for Cathay Pacific Airways Limited (HKG:293) shareholders, with the analysts delivering a...
(Bloomberg) -- EasyJet Plc said email addresses and travel data of about 9 million customers were taken by hackers in one of the biggest data breaches to hit the airline industry.The intruders also accessed credit card details for 2,208 customers in the “highly sophisticated” attack, EasyJet said Tuesday in a statement. The airline said it’s closed off the unauthorized access, notified those whose credit-card information was exposed and will contact the rest of the customers over the next few days.Cyber-attacks against businesses and their employees have surged this year as hackers take advantage of the disruption caused by the coronavirus pandemic. While the EasyJet breach was discovered in late January, predating the disease’s flare-up across Europe, the company is alerting those whose exposure was limited to email and travel details to guard against a rising number of so-called phishing attempts, a person familiar with the situation said.Airlines have had several high-profile breaches in recent years. In 2018, Hong Kong’s Cathay Pacific Airways Ltd. disclosed that hackers accessed information on 9.4 million customers, making it the world’s biggest airline data breach at the time. That same year, hundreds of thousands of British Airways and Delta Air Lines Inc. customers had their information hacked.“The EasyJet breach comes at a time of unprecedented challenge for airline operators,” said James Castro-Edwards, a partner at law firm Wedlake Bell. The potential consequences of enforcement action and any ensuing group litigation could be “catastrophic,” he added.British Airways FineThe U.K. fined British Airways, a unit of IAG SA, 183.4 million pounds ($224 million) over the hacking incidents, marking the first major British application of far-reaching European Union rules requiring companies to tighten anti-hacking measures.Under the EU’s General Data Protection Regulation, companies can be penalized by as much as 4% of their global annual revenue, depending on the nature of the incident. For EasyJet, that would be as much as 255 million pounds ($312 million) if the “higher maximum” penalty were imposed by the U.K. Information Commissioner’s Office.The ICO would investigate and take “robust action where necessary,” the agency said in the statement.Attack TimelineThe Luton, England-based carrier reported the breach in January and has been working alongside the ICO and the U.K.’s National Cyber Security Centre, said the person, who asked not to be named discussing a confidential investigation. So far there is no indication that credit card information had been misused, the person said.Passengers whose credit card details were stolen were informed in April and offered 12 months of free credit monitoring, according to an email sent to customers and seen by Bloomberg.An influx of employees working from home has opened up new network vulnerabilities for many companies, and phishing emails purporting to be from trusted health agencies prey on employees looking for information.Read more:Cyber Risks Abound as Employees Shift From Offices to HomesHackers Posing as CDC, WHO Using Coronavirus in Phishing AttacksUnder GDPR, companies have an obligation to report personal data breaches to authorities within 72 hours where feasible. According to the regulation, companies must as soon as possible also alert individuals whose data has been compromised in cases where the breach poses a “high risk to rights and freedoms.”While the U.K. has left the EU, GDPR rules would likely still apply, given the transition period under way and the low-cost carrier’s sizable business with countries and customers that remain within the bloc.The NCSC confirmed it was working with EasyJet to investigate the hack. It recommended anyone with accounts that could have been compromised change passwords and “be especially vigilant against any unusual activity in their bank accounts or suspicious phone calls and emails asking them for further information.”Reuters reported earlier that the hackers were suspected to be Chinese and thought to be involved in similar attacks on other airline websites, citing people familiar with the investigation. EasyJet and the ICO declined to comment on the report.Shareholder ShowdownCovid-19 has already forced EasyJet to ground planes and created the opening for a revolt by its founder and biggest shareholder, Stelios Haji-Ioannou. The International Air Transport Association estimates European carriers face a revenue loss of $89 billion in 2020.EasyJet on May 22 will hold a shareholder meeting called by Haji-Ioannou, who wants to remove four directors including Chairman John Barton, Chief Executive Officer Johan Lundgren and Chief Financial Officer Andrew Findlay. He’s seeking to halt the carrier’s continued expansion plans.EasyJet shares reversed earlier gains after the hack was disclosed, closing 0.8% lower at 547.20 pence in London.(Updates with details on breach from third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Cathay Pacific Airways Limited (HKG:293), which is in the airlines business, and is based in Hong Kong, saw a decent...
Cathay Pacific Airways Ltd said on Friday it made an unaudited loss of HK$4.5 billion ($580.53 million) at its full-service airlines during January-April and flagged a "very bleak" outlook as the coronavirus crisis grounded planes globally. The Hong Kong-based airline said passenger numbers in April dropped by 99.6%, compared with last year as it flew a skeleton network due to a ban on transit traffic in the Asian financial hub and little outbound demand. The HK$4.5 billion loss at full-service carriers Cathay Pacific and Cathay Dragon in the four months ended April 30 compared with a previously announced unaudited loss of HK$2 billion for the month of February.
Hong Kong's Cathay Pacific Airways Ltd will close its three cabin crew bases in the United States, the airline said on Friday, laying off 286 staff as the coronavirus pandemic has virtually halted global travel. The carrier has grounded most of its planes because of the fall in demand, flying only a skeleton network to major destinations such as Beijing, Los Angeles, Singapore, Sydney, Tokyo and Vancouver in April and May that represents just 3% of normal capacity. In a statement, Cathay said it was communicating with the affected crew in New York, San Francisco and Los Angeles as well as their union.
Hong Kong's Cathay Pacific Airways Ltd <0293.HK> will lay off 286 cabin crew based in the United States and furlough 201 pilots based in Australia and Britain, it said on Friday, as the coronavirus pandemic has virtually halted global travel. The carrier has grounded most of its planes because of falling demand, flying only a skeleton network in April and May to major destinations such as Beijing, Los Angeles, Singapore, Sydney, Tokyo and Vancouver that makes up 3% of normal capacity. In a statement, Cathay said it was communicating with the affected cabin crew based in New York, San Francisco and Los Angeles as well as their union.
Europe led world stock markets back to higher ground on Thursday as tentative moves to reopen parts of the some of its larger coronavirus-hit economies and a bounce in oil offset some truly dismal global economic data. The pan-European STOXX 600 index batted off equally grim UK retail figures and more warnings of countries facing double-digit recessions to rise 1% , while Wall Street futures were 0.8% up despite another sky-high jump in U.S. jobless claims. In the currency and bond markets both the euro and Italy's bonds got a lift while speculation mounted that the European Central Bank was looking to prevent further stress in the country's debt markets where debt-to-GDP now looks set to top 150% this year.
Asia's stock markets retreated from their highest levels for a month and the dollar extended gains on Thursday as the damage the coronavirus has wrought on the world economy soured appetite for risk. Another sky high figure is expected when U.S. weekly jobless claims land later in the day. E-mini futures for the S&P 500 fell half a percent in Asia after a 2.2% drop on the index on Wednesday and European futures were marginally lower .
Hong Kong's Cathay Pacific Airways Ltd <0293.HK> will make further cuts to passenger capacity because of extremely low demand, leaving it with just two flights a week each to four long-haul destinations in April, according to an internal memo. The airline carried only 582 passengers one day this week with a load factor of 18.3%, which compares to 100,000 customers on a normal day, Cathay chief executive Augustus Tang said in a memo to staff seen by Reuters. The carrier will maintain a skeleton long-haul network with two weekly passenger flights from Hong Kong to London, Los Angeles, Vancouver and Sydney, while hoping to keep three weekly regional flights to major destinations around Asia such as Singapore, Beijing and Tokyo.
(Bloomberg Opinion) -- Much as Pan Am Corp. was an emblem of the first wave of global aviation, Emirates has dominated the world airline industry for a generation. Its announcement that almost all passenger flights will be suspended from Wednesday marks the death knell of that era.The Dubai-based carrier is the largest airline by international passenger traffic, with the capacity to move its customers 391 billion seat-kilometers last year. In terms of cross-border traffic, that’s twice the capacity of any U.S. airline and about a seventh more than the three European carriers that are its closest international competitors in terms of scale.The shutdown of that vast network is a hammer-blow not just for the industry but for people around the world. There’s a reason so many airlines are (like Emirates) state-owned, or have special rights and duties to their home countries written into their constitutions. They aren’t just a leisure service, they’re a piece of vital national and international infrastructure that can provide an airlift service in an emergency. Emirates’ initial announcement of a complete suspension of flights Sunday was subsequently updated to say that some destinations would remain open “having received requests from governments and customers to support the repatriation of travellers.”Businesses that thrive on bustling cross-border traffic are inevitably going to struggle in current conditions. Cathay Pacific Airways Ltd., another carrier that, like Emirates, has no domestic aviation market, last week announced it was cutting 96% of capacity in April and May, which is as close as you can get to shutting down. Qantas Airways Ltd. is also ending international flights and Emirates’ local rival Etihad Airways PJSC has made drastic cuts to its schedules.We’ve seen something like this before. Pan Am went bankrupt amid the collapse in air travel that accompanied the 1991 Gulf War; its competitor Trans World Airlines Inc. entered the first of many Chapter 11 processes around the same time. Another wave of bankruptcies and rescue takeovers followed after the Sept. 11 attacks, and again after the 2008 financial crisis. More than a decade on from that, we’re probably overdue for another shakeout.That certainly looks like what we’re going to get. “Most airlines in the world” will be bankrupt by the end of May at current rates of cash burn, according to consultants CAPA Centre for Aviation. The industry needs about $200 billion in bailout money if it’s to survive, according to the International Air Transport Association, the largest group representing airlines.Emirates has some serious weaknesses as it approaches this perfect storm. Dubai’s status as the preeminent hub in the global network of transfer passengers, and its fleet of capacious twin-aisle jets, are as much a product of the recent era of promiscuous globalization as Pan Am’s fleet of gas-guzzling early-model 747s were a product of the era before the 1973 oil crisis.On an immediate level, that means it lacks even the meager domestic aviation cashflows that rivals in the U.S., China and elsewhere can fall back on. In the longer term, there’s the risk that Covid-19 and the Trump-driven trade wars that preceded it raise drawbridges across the world, leaving behind a dark mentality of xenophobia as gates are closed to outsiders. In that grim future, Emirates’ Benetton catalog-tinged vision of a multicultural world shaking hands at Dubai airport looks as outdated as, well, shaking hands.Even if things return to a semblance of normalcy at some point, Emirates’ golden years are behind it – a fact that neatly coincides with the upcoming retirement of Tim Clark, who led the airline since its inception.Rivals with bigger domestic markets have already been looking to use longer-haul 787s and A350s to skip past hub airports like Dubai altogether. The A320neo and the 737 MAX, should it recover from its current woes, will also bite off pieces of medium-haul traffic with budget carrier-style prices, undermining key routes into Europe and South Asia.Emirates still has some advantages in facing the coming conflagration. Unlike Etihad and Qatar Airways, it has never reported a loss in financial reports dating back to 1989. That’s a fairly extraordinary result for an airline that’s been around for so long — although there’s still a week still to go on its current financial year.Most importantly, though, the only shareholders it answers to are Dubai’s ruling Al Maktoum family. For decades, they’ve regarded the carrier as a crucial element of their oil-poor emirate’s strategy for a long-term economic future. With crude prices currently south of $30 and Gulf monarchies edging alarmingly close to burning through their own petrocash piles, that bet looks as sound as it’s ever been.If aviation is about to be crippled by a virus-driven resurgence of nationalism, it’s the carriers most closely bound up with their governments that stand the best chance of survival.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
SYDNEY/SINGAPORE, March 20 (Reuters) - The collapse in global passenger flights has left airlines with fresh challenges: how to manage overhedged jet fuel positions as oil prices crashed to just a third of some contracts agreed in anticipation of rising prices and solid air travel demand. With a sharp plunge in oil prices and the rapid spread of the flu-like virus globally raising uncertainty when and how strongly air travel demand will recover, airlines are now left counting the cost of their heavy fuel hedging. "Given the substantial reduction in our capacity, we do have an overhedged position and that will come at a cost... that we'll realize in the next couple of months," Australia's Qantas Airways Ltd Chief Financial Officer Vanessa Hudson told analysts this week.
Global airlines are fast running out of cash after cutting capacity by 90% or even grounding entire fleets due to the broad travel restrictions to contain the spread of the coronavirus, calling into question the survival of several firms. The industry's main global body, the International Air Transport Association (IATA), estimates the sector needs up to $200 billion in government support to help airlines survive.
SYDNEY/PARIS (Reuters) - Boeing and other U.S. aviation companies are seeking billions of dollars in aid as they battle to survive a plunge in demand caused by the coronavirus pandemic, while Airbus is pausing production at two sites to bolster health and safety measures. The rapid spread of the virus across the world has battered airlines as governments have introduced travel restrictions and consumers have stopped making bookings, calling into question the survival of several companies. "It's now fair to call this the single biggest shock that global aviation has ever experienced," Qantas Airways Ltd CEO Alan Joyce said in a memo to the airline's 30,000 staff on Tuesday that was seen by Reuters.
The sale will enable Cathay Pacific to realise cash which will be used towards its general working capital requirements, the company said in a statement. The carrier last week warned of a substantial loss in the first half of the year and flagged more cuts in flights due to the "unprecedented challenge" from the coronavirus outbreak that has forced it to ground more than half of its fleet. Cathay said it would lease the aircrafts back from BOC Aviation.