2 Positive News May Boost Cathay Pacific (0293) Share Price
2020 was a tough year for aviation industry. All listed airlines company reported huge loss and suffered from massive debt loan. The situation is more worst for Cathay Pacific as it dominate by international haul. In 2020 fiscal year, Revenue was down 56.1% to HKD 46.9 billion. Earnings per ordinary share was down 463.4% to -424.3 HK cents. In 2020, Cathay Pacific also launched recapitalization plan to improve its cash-flow which we had discussed on the post Why this is the best time for investing Cathay Pacific (0293.HK)
However, two announcements on 26 April 2021 may change the situation.
HK-Singapore Air Travel Bubble
The Governments of the Hong Kong Special Administrative Region and Singapore announced that designated flights under the bilateral Air Travel Bubble (ATB) arrangement will begin on May 26 2021, resuming cross-border air travel in a gradual and orderly manner amidst stabilized epidemic situations of the two places.
Under the the bilateral Air Travel Bubble scheme, Cathay Pacific is expected to operation one daily return flight by its A350-900 fleet.
Travel scheme to be extended
The Government of the Hong Kong Special Administrative Region announced the Return2hk Scheme will be extended from Guangdong Province and Macau to other China provinces and municipalities. A daily quota of 1,000 has been set for the airport.
Currently, Cathay Pacific operates flights from Hong Kong to Beijing, Shanghai, Chengdu and Xiamen. Under the extended travel scheme, more route and flight are expected to increase.
Air Travel Bubble and extended travel scheme can’t turn Cathay Pacific profitable. However, as a turning point, it definite can help narrowing the lost. As stock price are based on future discounted cash flow, the stock price of Cathay Pacific should expect to boost by this two announcements.