(Bloomberg) -- Embattled Cathay Pacific Airways Ltd. reported its biggest drop in passenger traffic in more than a decade after facing heavy backlash from China in the wake of its employees joining protests in Hong Kong.
Hong Kong’s flag carrier and its Cathay Dragon unit carried 2.9 million passengers in August, down 11% from a year earlier, the company said in a statement on Wednesday. That’s the biggest drop since mid 2009, according to data compiled by Bloomberg.
The figures represent the latest sign that the airline is in crisis. About a month ago, China’s civil aviation authority began clamping down on Cathay, prompting the carrier to fire staff and threaten to terminate workers for even supporting the demonstrations -- let alone participate in them. Both the airline’s chief executive officer and chairman have since announced their resignations.
“August was an incredibly challenging month, both for Cathay Pacific and for Hong Kong,” Chief Customer and Commercial Officer Ronald Lam said in a statement, adding that tourist arrivals were nearly half what they usually are in what is typically busy summer holiday month. “We don’t anticipate September being any less difficult.”
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The protests in Hong Kong, now in their 15th week, continue to impact the city’s tourism industry and in particular visitors from mainland China, who are usually its biggest group of tourists. The Travel Industry Council of Hong Kong said Wednesday that the number of Chinese group tours to the city in the first 10 days of September plunged 90% from a year earlier. That followed a 63% drop in August.
The demonstrations have at times spread to the airport, crippling operations there and causing hundreds of flight cancellations. Hong Kong Financial Secretary Paul Chan indicated recently that tourism to the city last month declined the most since the 2003 SARS epidemic.
Chinese tourists are especially wary due to a perception they could be targeted in the protests, which state media are framing as being driven by violent extremists. Lam said inbound traffic from mainland China and northeast Asia was “severely hit” last month.
State-run companies including China Citic Bank International Ltd., China Huarong International Holdings Ltd. and finance-to-brewing conglomerate China Resources National Corp. also banned their employees from booking flights on Cathay, people familiar with the matter have said.
In its statement Wednesday, Cathay said demand for premium class travel suffered a more significant drop relative to leisure travel in August. The carrier also said it would make some short-term capacity alignments, and that it remained optimistic for the medium term.
“Many mainland Chinese tourists will not choose Cathay when they fly to Hong Kong,” Luya You, a Hong Kong-based transportation analyst at Bocom International. Still, You said she remains optimistic to the airline’s long-term outlook.
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