Hong Kong's Cathay Pacific Airways announced it had reached a deal with Airbus SE on Wednesday to postpone the delivery of A350s and A321neos and was in advanced discussions with Boeing to delay its 777-9 deliveries.
Cathay disclosed that the A350s set to arrive this year and next year were now scheduled for 2020-2023, and that the A321neos expected for 2020-2023 would arrive from 2020-2025. The carrier didn't include any additional specifics on the number estimated per year.
In an official prospectus provided to Simple Flying, the deferred orders are anticipated to produce cash savings to the Cathay Pacific Group in the short to medium term.
The prospectus is for Cathay Pacific's Rights Issue for $1.5 billion with the Hong Kong Stock Exchange. The move comes after Hong Kong authorities approved a recapitalization program for the carrier to help secure $5 billion in total financing.
Cathay agreed with Airbus for the deferment of orders of commercial jets by a maximum of two years in a decision that could reduce the company's monthly cash burn by 50 percent while the ongoing global health turmoil hammers the airline industry.
Cathay has been losing HK$3 billion a month recently as the coronavirus pandemic triggered a meltdown in travel demand. The airline disclosed last week that it was ready to report a loss of HK$9.9 billion in the first two quarters, and it has turned to the Hong Kong government for financial assistance in a nearly HK$40 billion bailout package.
According to Paul Yong, a senior analyst at DBS Bank in Singapore, "this actually ensures that Cathay Pacific will continue to operate... the deferral will save quite a bit of money," The National quoted Yong as saying in its report.
The International Air Transport Association expects the world's airline industry to suffer a net loss of $84 billion this year. Cathay shares have retreated 42 percent so far this year and were slight down on Thursday at HK$5.73.
Cathay's passenger volume plummeted 99 percent in June, compared with the previous year. In April, it saw a 99.6 percent decline. Aside from negotiating for delivery delays, the airline company has carried out multiple financial preservation steps to ease the cash impact.
Such measures include cuts in paychecks for executives and imposing voluntary special leave programs for its workers and slashing passenger volume.
Cathay has called the coronavirus turmoil as the biggest challenge to the airline market that it has ever seen, and it doesn't expect a substantial recovery for many years.
