The Cathay Pacific Airways Ltd logo is displayed atop a building at Cathay Pacific City, the company's headquarters, in Hong Kong in August, 2018. Photo:VCG

Despite a promising start in January, with encouraging signs that passengers were beginning to return following Hong Kong's social unrest in the second half of 2019, Cathay Pacific Group is now facing its most severe challenge in its 70-year plus history.

The Cathay Pacific Group said on Wednesday that its attributable loss was HK$9.86 billion in the first half of 2020, compared with a profit of HK$1.3 billion in the same period the previous year. Both Cathay Pacific and Cathay Dragon reported an after tax loss of HK$7.3 billion in the first half of 2020, down from profit of HK$675 million in the first half of 2019.

Patrick Healy, Chairman of the group said the impact of COVID19 on its business and the global economy is unprecedented, and the global health crisis has decimated the travel industry and the future remains highly uncertain. Most analysts suggest that it will take years for the aviation industry to recover to pre-crisis levels.

After first loss in 2016, Cathay Pacific launched a three-year corporate transformation plan, which included cutting 600 employees and the reorganization of its headquarters team, which attracted much attention from the outside world.

In July 2019, Cathay Pacific announced that it had acquired Hong Kong Express, a low-cost airline and expanded its aviation network.

Since mid-2019, the demand for passenger transport in Hong Kong declined rapidly, and the difficult operating environment has become more severe with the outbreak of the virus.

Passenger revenue decreased by 72.2 percent to HK$10.3 billion in the first half of 2020. In total, the group carried 4.4 million passengers in the first six months of the year, 76 percent fewer than in 2019. The load factor also dropped significantly, to 67.3 percent from 84.2 percent in the first half of 2019. In April and May the group was carrying an average of only 500 passengers a day.

The Hong Kong aviation market, which depends on overseas flights, is unlikely to recover amid the global downturn, Lin Zhijie, a market watcher told the Global Times on Wednesday.   

He explained that the sectors in Hong Kong and the Chinese mainland are completely different, as the mainland aviation industry has the support of domestic travelers. 

Although the international epidemic is still serious, the current domestic market has recovered to 80 to 90 percent of the level before the virus. As the coronavirus still rages around the world,  overseas flights into Hong Kong are still being hit hard, and "there is no room for the group to turn around," Lin said. 

The Hong Kong's local aviation market has also been dragged down by a third wave of the virus in the city.

Hong Kong reported 38 new COVID-19 cases on July 10, including 32 locally transmitted infections, after the city reported 42 cases in previous day, the highest number in a single day that week. 

Chief Executive Carrie Lam announced more tightening of prevention and control measures, including gathering restrictions and business suspension orders. Any further escalation of the epidemic will likely hit catering, retail and the aviation industries.

The Hong Kong Airport Authority said that June passenger traffic and aircraft takeoffs and landings at the airport declined by 99 percent and 71.8 percent respectively from the same month last year.

If the Hong Kong epidemic cannot be controlled and travelers are prohibited from entering or leaving the city, it is hard for Cathay Pacific to survive, Lin said.