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Chart of the Week: Cathay Pacific Shares Keep Falling

Cathay Pacific Airways Ltd (SEHK: 293) shares are at a multi-year low. Here’s why. – Man dragging suitcase Samsonite shares good investment

Hong Kong airline and the city’s flagship carrier Cathay Pacific Airways Ltd (SEHK: 293) has had a wretched time amid the fallout of Covid-19.

Not only did it add to the drop in travel and tourism from last year – due to anti-government protests – but it also meant the company had to seek a government-backed bailout in early June.

Like airlines worldwide, it is fighting for survival given plummeting revenues and a virtual halt to international air travel. However, for an airline like Cathay Pacific, the pain is even more acute given the city relies wholly on international air travel (like a Singapore).

Unlike China or the US – where airlines have massive domestic markets to serve – a city such as Hong Kong can’t make up the shortfall given its size.

This unfortunate series of events has been reflected in its share price which has reached a multi-year low and now sit around 70% below where they were five years ago (see chart below).

On Friday, the company announced that it expects to make a loss of a whopping HK$9.9 billion (US$1.27 billion) in the first half of 2020. This is a huge swing from the HK$1.3 billion profit it posted in the first half of 2019.

Shares closed down 1.5% on Friday to end the day at HK$6.02 although they did touch an intraday low of HK$5.90.

Shares of Cathay Pacific are now trading lower than they were during the nadir of the Global Financial Crisis in 2008/2009.

Given there’s no end in sight to the Covid-19 pandemic, it would take a brave investor to wager that Cathay Pacific will be able to turn a corner before the end of 2020.

Cathay Pacific’s five-year share price performance (HK$)

Cathay Pacific shares

Source: Google Finance

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Tim Phillips doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited(www.fool.hk) 2020

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