Short Takes
November 13th 2020
Capacity at Cathay Pacific and its now-terminated regional wing, Cathay Dragon, went backwards in October as the student travel market dried up and demand for European services dropped rapidly amid a resurgence of COVID-19 cases in the Special Administrative Region. Read More » The airline group said in its monthly traffic report, published today, it operated 8.4% of planned capacity in October, down from 9% in September. Cathay Pacific Group chief customer and commercial officer, Ronald Lam, said it was the first month-on-month capacity decline since May. "We carried on average only 1,243 passengers per day. Load factor was 18.2%, its lowest ever point,” Lam, said in the report, and added passenger demand this month had been sluggish so far. "We remain in a very dynamic situation and overall recovery is anticipated to be slow," he said. Lam reiterated previous forecasts that the group expected to operate less than 25% of 2019 passenger capacity in the first half of 2021 with the figure to be below 50% for the full year.
Embraer this week reported a net loss of US$121.2 million for the three months to September 30, 2020, falling deeper into the red from a net loss of US$77.2 million in the prior corresponding period as aircraft deliveries slowed due to the coronavirus pandemic. Embraer CEO, Francisco Gomes Neto, told analysts during the company's financial results presentation there was still a lot of uncertainty in the market. "We see that 2021 will be still a challenging year for commercial aviation. We are very clear on that scenario, but we see an opportunity to grow. I mean from 2022 onwards," Neto said.
Hanjin Group, the parent company of Korean Air, was considering buying into South Korea's second-largest airline group, Asiana, Reuter’s news agency reported this week, citing investment banking sources. In September, a proposed takeover of Asiana by a consortium led by Hyundai Development Company (HDC) and Mirae Asset Daewoo was scrapped.
Singapore Airlines (SIA) said this week it had raised S$850 million (US$630 million) in fresh capital through the sale of convertible bonds to institutional investors that was four times oversubscribed. SIA said 60%-80% of the proceeds would be used for operating cash flow and paying debt, while 20%-40% would be for capital expenditure. The bonds, which can be converted to shares, had a coupon rate of 1.625%, payable semi-annually. The initial conversion price was S$5.743 for each new share, representing a 45.77% premium to Wednesday's closing price of S$3.94. This latest transaction brought to S$12.2 billion SIA has raised to ride out the coronavirus pandemic.
Dubai-headquartered Emirates Airline, a fierce competitor with Asia-Pacific carriers, especially long-haul to Europe, has reported an interim loss of US$3.8 billion for its 2020-2021 year. Revenue, mainly from cargo, declined 75% for the reported period, the gulf carrier said.
