Cathay first-half loss to narrow as airline plots recovery

Cathay Pacific Airways Ltd. flagged it will post a narrower first-half loss than the previous year on continued strong cargo demand and cost-cutting measures.

“Our consolidated losses in the first half of 2022, while substantial, are expected to be lower than the consolidated losses reported in the first half of 2021,” Ronald Lam, the airline’s chief customer and commercial officer, said in a statement Tuesday. Cathay reported a HK$7.6 billion ($968 million) deficit for the six months ended June 30, 2021.

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The Hong Kong-based carrier also said it expects the number of destinations it operates to will double by the end of the year from 29 in January, as the Asian financial hub dials back some of the world’s most restrictive Covid-19 measures. The airline flew to just over 100 destinations prior to the crisis.

Cathay is also benefiting from significant pandemic easings around the world, like the removal of quarantine periods and testing, which are making travel easier for most passengers and flight crew. 

Hong Kong, however, is sticking to a seven-day quarantine for now, limiting any upside for the carrier and containing capacity in May at 4.1%. Singapore Airlines Ltd., by contrast, aims to be operating at 67% of its pre-Covid capacity by September. On an adjusted basis, SIA reached 63.3% of pre-pandemic levels in April, Bloomberg calculations show.

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Last month, Cathay said it expects cash burn to drop to less than HK$500 million a month for the next few months.

“We will be keeping a close eye on the opening up of travel activities in nearby countries, such as Japan and South Korea, and will look to operate flights to capture potential demand wherever possible,” Lam said Tuesday.

“We also expect transit traffic to improve and become more diversified, in particular between the UK, Australia and New Zealand, as well as North America and Southeast Asia.”

Read more: Hong Kong ‘Falling Behind’ in Global Reopening, Cathay Says

For May, Cathay carried 57,982 passengers, up 142% on the same month of 2021, and the highest so far this year. That’s still down 98% versus pre-pandemic levels in May 2019.

Air freight remained robust for the world’s fifth biggest cargo carrier by capacity. Cathay carried 92,426 tonnes of cargo last month, flat on May 2021 and a 45.1% decrease compared with the same period in 2019.

“The situation in Shanghai continued to affect demand, although tonnage gradually picked up as Covid-19 restrictions started to ease toward the end of May,” Lam said, referencing the city’s months-long lockdown to stamp out the virus. “As for Hong Kong, volumes improved as cross-border feeder services between Shenzhen and Hong Kong allowed for a more stable flow of cargo.”

Shares in Cathay Pacific, up 22% this year, rose as much as 0.4% in afternoon trade Tuesday.