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Why Cathay Pacific, Singapore Airlines may need more time to recover



Aircraft operated by Cathay Pacific Airways Ltd. stay on duty at Hong Kong International Airport in Hong Kong, China, on Friday, August 7, 2020.

Paul Yeung | Bloomberg | Getty Images

Singapore Airlines and Hong Kong-based Cathay Pacific Airways will “inevitably take longer”

; to recover from the coronavirus crisis, a CNBC aviation adviser said.

This is because these carriers are deployed in markets without domestic demand for flights, at a time when international travel is still very limited, said Joanna Lu, head of Asia consulting at Cirium.

Airlines have suffered massive losses after air travel was virtually halted when most countries closed their borders earlier this year, in a bid to stem the spread of the coronavirus pandemic.

Both carriers saw profits turn into losses on their last profit report card.

Cathay Pacific reported a loss of $ 9.87 billion ($ 1.27 billion) for the first half of 2020, after recording a gain of $ 1.35 billion a year earlier. For the quarter ended June 30, Singapore Airlines reported a net loss of $ 1.12 billion ($ 817.5 million), up from a net profit of Singapore $ 111 million a year earlier.

Some countries have been returned by tourists, with Covid-19 testing and health examinations at airports, but many are still closed to international visitors as the confirmed cases are 20.5 million worldwide.

Lu told CNBC “Capital Connection” on Wednesday that travel within a domestic or regional market is likely to resume faster, compared to long-haul flights to international destinations.

“Those airlines that are serving a large scale of the domestic market will reap more benefits from it, including carriers in China, Japan and possibly Indonesia,” she said.

However, the opposite is true for Hong Kong and Singapore, where locals do not travel within the country by air due to the small land area.

Lu also outlined the reasons why the International Air Transport Association in June said Asia Pacific is expected to post “the biggest absolute losses” in 2020.

She said disruption in international travel has been the “main cause” of “negative progress” in Asia Pacific industry. Moreover, she said the region has many countries and markets, while Europe and the US have “worked hard as a single, unified internal market”.


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