Cathay Pacific (CX, Hong Kong International) has confirmed that it is in advanced talks with Boeing regarding the deferral of its B777-9 orders beyond 2023.
"On January 27, 2021, Boeing announced a delay of the 777X programme with delivery of the first aircraft expected in late 2023. Cathay Pacific is in advanced negotiations with regard to the deferral of its B777-9 deliveries," the airline said in its annual financial report.
Cathay Pacific did not provide any further details regarding a revised delivery timeline. It has a total of twenty-one B777-9s on firm order from the manufacturer.
The airline also said that it increased the impairment charge related to aircraft unlikely to return to "meaningful economic activity" from HKD2.46 billion Hong Kong dollars (USD317 million) announced in mid-2020 to HKD2.87 billion (USD370 million).
"At half-year, we have impaired 16 aircraft. This has increased to 34 by the end of the year. We look at whether the aircraft are likely to re-enter meaningful economic service before they are retired, or their leases expire. As a result of this assessment, we have concluded we needed to impair a further 18 aircraft," Chief Financial Officer Rebecca Sharpe said during the investor briefing.
In the second half of the year, the airline formally returned three leased A320-200s, one leased A321-200, and three A330-300s, although the impairment also includes aircraft that remain in storage and have yet to be formally phased-out. Cathay Pacific said that as of December 31, 2020, it had 92 passenger aircraft operated by Cathay Pacific and low-cost carrier subsidiary HK Express in long-term storage at Alice Springs and Ciudad Real airports, where environmental conditions are more favourable for aircraft maintenance.
Despite the ongoing cuts, the airline took delivery of two A321-200Ns, three A350-900s, and one A350-1000 for the mainline, and four A320-200Ns for HK Express in the second half of 2020. The carrier agreed with Airbus to extend deliveries of the remaining three A350-900s and five -1000s, originally due to complete in 2021, through 2023. It also extended the delivery time frame of its thirty A321neo for Cathay Pacific and HK Express, which had been planned to complete in 2023, through 2025.
Sharpe added that the airline evaluated that the aircraft due to return to lessors or be phased-out in the first half of 2022 carry a residual value of HKD800 million (USD103 million). Consequently, should the market recovery slip by six months, the airline would impair these aircraft as they would no longer return to service.
"We are confident in the numbers we presented in our results, we are doing just for transparency and awareness in these very uncertain times," Sharpe underlined.
The airline, which saw passenger demand plummet to below 10% of its pre-pandemic levels, posted a record loss of HKD13.86 billion (USD1.8 billion) in 2020. Almost 60% of its revenues last year came from the cargo sector, which in 2019 contributed less than a quarter of the group's total revenues.
