Hong Kong’s Cathay Pacific Airways (CX) is ready to cut capacity or cancel flights should the U.S.-China trade war result in lower demand for its cargo activities.
So far, the tit-for-tat battle had not been “catastrophic” for the company’s freight arm, which generates a quarter of CX’s revenue, the South China Morning Post (SCMP) writes, quoting Cathay Pacific CEO Rupert Hogg.
The executive added to this that current cargo volumes were still above 2017’s tonnage. But “it is definitely the case that this year has been lower than last year and the numbers sort of speak
for themselves,” the Mr Hogg said, before adding that “demand is down but it’s not hugely down or catastrophic”.
The Trump administration imposed tariff increases from 10% to 25% on US$200 billion of Chinese goods on Friday last week as the U.S. alleged that China was backtracking on almost all aspects of a draft trade deal both sides were working on. In response, China has threatened unspecified countermeasures.
According to Mr Hogg, the impact of the tariff hikes on Cathay Pacific's cargo business was still unclear: “We just don’t know what is going to happen. It’s too early to say.”
Almost 50% of the company’s cargo volumes is flown on passenger aircraft, the SCMP said, offering it scope to adjust.
“For our freighters we can flex up and down really quickly, cancel or combine services,” Hogg said, noting it was a hypothetical consideration.
Battle for HK Express control
In another development, the SCMP quoted Hogg as saying that he was “perfectly comfortable with the progress” of the acquisition of local low-cost rival HK Express, which Cathay Pacific announced on March 27 and is scheduled for completion by December 31.
As earlier reported by CargoForwarder Global, HK Express, headed by executive chairman Zhong Guosong, who indirectly controls 48.6% of the company, opposed the sale by the financially-troubled HNA Group and immediately launched a bid to contest the sale and scupper the deal.
Zhong is involved in a separate, more recent courtroom battle with HNA, which is backing the incumbent shareholders of Hong Kong Airlines’ holding company.
Analysts have pointed out that the legal fight about HK Express could complicate Cathay Pacific's bid to buy the low-cost airline. The case will resume on June 5, to determine who has the legal right to control the carrier. It is thought that if Zhong wins control he could drive a further wedge into the HK Express sale.
Nol van Fenema