Swire expects losses in first-half report as coronavirus hits Cathay Pacific, property units

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/companies/article/3074959/swire-expects-losses-first-half-report-coronavirus-hits-cathay?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | March 18, 2020 4:20 PM SGT
Hong Kong conglomerate Swire Pacific expects to record a loss in the first six months this year as the coronavirus batters the airline business of Cathay Pacific Airways, one of the group's biggest assets.
"The coronavirus has adversely affected our business in Hong Kong and mainland China and the impact on Cathay Pacific is especially clear," chairman Merlin Swire said at a media briefing on Thursday. "It is the big problem, expecting substantial loss in the first half" despite measures to trim costs, he added.
The first half of 2020 will be "extremely challenging financially" for its 45 per cent-owned Cathay Pacific, with an already reduced winter season capacity further hit by the significant drag from the viral outbreak. It remains difficult to predict when market conditions will improve, the chairman said.
Cathay Pacific has said it faces substantial losses through June as global peers in the industry reeled from an unprecedented collapse in passenger traffic caused by the pandemic and travel alerts. The airline is trimming its capacity by 65 per cent in March and April, doubling the pullback in February.
Guy Bradley, CEO of Swire Properties. Photo: Jonathan Wong alt=Guy Bradley, CEO of Swire Properties. Photo: Jonathan Wong
Swire Properties, the unit that manages Pacific Place in Central and six retail-hotel complexes in mainland China, has seen lower rents and occupancy this year as the virus slammed the city's retail industry that struggled through anti-government protests last year.
"We are cautiously optimistic in mainland China's retail business as we have seen some good signs of recovery; however it is still gloomy in Hong Kong and we are less optimistic of the city's retail [sector] in the short term," chief executive Guy Bradley said during the briefing.
Retail sales in Hong Kong slumped 21 per cent in January, a government report showed this month. That added to an 11 per cent slide in 2019, the steepest in 20 years, after anti-government protests turned violent and starved the city of its lifeblood in mainland Chinese tourists and their spending power.
Sales could plunge by as much as half this year as most of the city's borders with China remain shut amid the Covid-19 epidemic and the impact could be more severe than losses caused by social unrest last year, according to Sunlight Real Estate Investment Trust.
Swire Pacific reported a 62 per cent drop of profit to HK$9 billion on revenue of HK$85.65 billion, citing social unrest in Hong Kong and global trade tensions for the slide. Cathay Pacific had also warned of substantial losses this year through June, after profit fell 28 per cent in 2019.
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