Cathay Pacific narrows loss in first half

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Hong Kong flag carrier Cathay Pacific has seen its business plumment due to the city's COVID measures. (PHOTO: Matt Driskill)

https://bit.ly/3PE9HlMHong Kong’s Cathay Pacific Airways announced on Wednesday (10 August) a first-half loss of HK$5 billion (US$637 million), narrowing from the prior year’s HK$7.57 billion, as easing quarantine rules boosted passenger numbers. The airline said in June it expected a lower first-half loss than the prior year, though it warned the figure would still be “substantial”.

The rebound was attributed to strong passenger flight business increasing by 178.9 percent to HK$2.06 billion in the first half of 2022, compared with the same period last year. Cathay also reported a 17 per cent increase in revenue to HK$18.55 billion, compared with HK$15.85 billion the same period last year, while costs decreased slightly.

Cargo flights continued to be the airline’s breadwinner, generating HK$13.8 billion in revenue in the first half of the year, an 8.9 percent jump year on year. The airline carried an average of 1,853 passengers per day, up 113.4 percent, compared to the same period last year. The cargo load factor – an indicator on capacity filled – was 75.8 per cent compared with 81.4 percent previously. The company attributed the strong revenue to an increase in cargo planes travelling to the Americas and Europe, with such flights operating at more than half of pre-pandemic cargo capacity levels in June.

Cathay announced in late July that it would bring back passenger planes parked in the desert surrounding the town of Alice Springs in Australia, where one-third of its fleet was previously sitting idle. The airline on Monday also urged Hong Kong’s government to produce a clear roadmap for the phasing out of all anti-epidemic travel restrictions to protect the city’s status as an aviation hub. The move followed the decision by authorities to reduce the hotel quarantine from 7 days to three from Friday, with inbound arrivals allowed to spend the remaining four days at home or in other accommodation with limited freedom of movement.

Patrick Healy, chairman of Cathay Pacific Group, said the airline had an extremely difficult start to 2022. “For more than two years, COVID-19 has had an unprecedented impact on global aviation with the situation often fluctuating between periods of relative improvement and significant setbacks as new variants of the virus have emerged. The first half of 2022 bore similarities to the first half of 2021. The spread of a new COVID-19 variant, Omicron, led to increasingly stringent travel and operational restrictions, most notably in Hong Kong and the Chinese Mainland, which severely constrained our ability to operate flights and greatly affected the demand for travel.”

Early in January, Hong Kong saw the introduction of a number of measures intended to combat the virus, including a ban on flights to Hong Kong from nine countries, among them key markets such as the UK and the US, and a ban on transit and transfer services via Hong Kong International Airport. Quarantine rules for Hong Kong-based aircrew as well as the route-specific flight-suspension mechanism were also further tightened.

“These restrictions resulted in a particularly unfavourable first few months of 2022 and we significantly reduced our passenger and cargo flight capacities,” Healy said. “As our home city endured an especially difficult phase of the pandemic, we supported the safe movement of people and essential goods between Hong Kong and the rest of the world and preserved the fundamental integrity of our passenger and cargo networks. The challenges posed by COVID-19, and the restrictions in place to combat it, placed a considerable burden on many of our employees, most notably our aircrew, thousands of whom spent countless nights in quarantine hotels. I wish to extend our sincere appreciation to all our people for the selfless endeavour and extraordinary professionalism they displayed throughout this very difficult time.

Looking ahead, the most recent adjustments to quarantine arrangements for arriving passengers are expected to improve travel sentiment,” Healy said. “We are targeting to progressively increase passenger flight capacity up to a quarter and cargo flight capacity to 65 percent of the pre-pandemic level by the end of 2022. This gives us confidence that our airlines and subsidiaries will see a stronger second-half than first-half performance. However, the results from associates (the majority of which are reported three months in arrears) will remain very challenging.” 


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