July 22, 2020 / 2:30 AM / 21 days ago

Cathay Pacific reaches deal for Airbus delivery delays, in advanced talks with Boeing

SYDNEY (Reuters) - Hong Kong’s Cathay Pacific Airways Ltd said on Wednesday it had reached agreement with Airbus SE to delay the delivery of A350s and A321neos and was in advanced talks with Boeing Co about deferring its 777-9 orders.

FILE PHOTO: Cathay Pacific aircraft are seen parked on the tarmac at the airport, following the outbreak of the new coronavirus, in Hong Kong, China March 5, 2020. REUTERS/Tyrone Siu/File Photo

The airline said the A350s due to arrive in 2020 and 2021 were now scheduled for 2020-2023 and A321neos expected from 2020-2023 would arrive from 2020-2025. It did not provide further details of the number expected each year.

“This deferral of deliveries is expected to produce cash savings to the Cathay Pacific Group in the short to medium term,” it said in a prospectus for its HK$11.7 billion ($1.51 billion) rights issue lodged with the Hong Kong Stock Exchange.

Cathay had expected deliveries of 32 A321neos, 12 A350s and 21 777-9s by 2024, according to a November 2019 investor presentation.

An Airbus spokesman said his company did not comment on delivery schedules for individual airlines. A Boeing spokeswoman said her company did not comment on customer discussions.

Most airlines globally are trying to defer new aircraft deliveries as they grapple with the downturn from the coronavirus pandemic, which has wrecked travel demand.

Cathay last week warned it expected to report a HK$9.9 billion loss for the six months ending June 30, including impairment charges on 16 planes.

The airline said on Wednesday that it had reduced its monthly cash burn to about HK$1.5 billion from HK$2.5 billion to HK$3 billion while maintaining a minimal flying schedule.

However, it said that there was no assurance travel would rebound to pre-outbreak levels and that it expected its full-year results to be “materially worse” and would include the mark-to-market impact of fuel hedging losses.

Cathay, which received a $5 billion rescue package from the Hong Kong government and shareholders including the rights issue, said it might further access equity and debt capital markets to strengthen its balance sheet.

($1 = 7.7509 Hong Kong dollars)

Reporting by Jamie Freed; Editing by Jacqueline Wong and Gerry Doyle

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