Cathay Pacific beefs up financial position, forecasts lower monthly cash burn, higher capacity in August

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Hong Kong flag carrier Cathay Pacific has, like airlines around the world, been hit hard by the COVID-19 pandemic. (PHOTO: Matt Driskill)

Use this oneHong Kong flag carrier Cathay Pacific said on Friday (25 June) that it has shored up its financial position and would be burning less cash starting in July as it works to weather the COVID-19 pandemic and the near total shutdown in international aviation.

The airline told an invitation-only analyst briefing that it would burn less than HK$1 billion (US$128 million) a month from July until the end of this year. The airline has been aggressively cutting costs and employees and raising cash from bond sales and government funding. “We currently do have a very healthy liquidity balance,” Chief Financial Officer Rebecca Sharpe said. “Our costs continue to be tightly controlled. Discretionary spend remains on hold.” The airline also revealed it had grown its cash balance by almost two-thirds since the start of the pandemic to an unaudited HK$32.8 billion at the end of May.

Download the Cathay Pacific analyst presentation here.

Separately, the airline said new figures showed it burned less than HK$1.5 billion a month on average in the first half of the year. Stricter rules on travel that came into force in February raised its cash burn by up to HK$400 million to as high as HK$1.9 billion per month.

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Airlines like Cathay Pacific have had to ground hundreds of planes and slash capacity as international travel has ground to a virtual halt. (PHOTO: Shutterstock)

The airline still expects a “very substantial loss” in the first half of 2021, but at an amount somewhat lower than the HK$9.87 billion lost in the first half of last year, and HK$11.78 billion in the second half of 2020. Brisk air freight operations have brought in much-needed revenue, according to a report in the South China Morning Post.

Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam. (PHOTO: Cathay Pacific)

Cathay Pacific said it was also forecasting an increase in capacity starting in August with flights for students to China and the UK. Chief Customer and Commercial Ronald Lam said the airline forecast an increase of between 10-20 percent in capacity and said the airline welcomed a decision by the Hong Kong government to cut quarantine times for certain passengers from specific countries. “In the coming two months, we plan to ramp up our capacity, especially in August,” Lam said during the Q&A session that was made available online over the weekend. “We expect our capacity will go up about 10 percent, and hopefully get closer to 20 percent. Beyond August, I think, at the moment, it still quite fluid.”

Lam also said the airline was in contact with mainland China aviation authorities and others to open up more flights and was also hoping to, at some point, open a travel bubble with Singapore that has so far been postponed twice because of fluctuations in the number og COVID cases in both cities. Lam also said the airline has managed to, for the most part, maintain its slots at various airports around the world and was in contact with airports on a “season by season” basis to retain its slots. “In general we have been able to retain our slots but the situation could change,” Lam said.

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