Cathay flags worse-than-expected loss amid slow Covid comeback

Cathay Pacific Airways Ltd. expects to report a larger-than-forecast loss in 2022 — around double what analysts were looking for — as the carrier claws its way back from Covid-19.

Hong Kong’s main airline said in an exchange filing Friday that it expects to report an annual net loss of between HK$6.4 billion ($817 million) to HK$7 billion, significantly larger than the HK$3.4 billion deficit the market was expecting. Cathay lost HK$5.5 billion in 2021.

Although the group’s performance in the second half was a “marked improvement” over the first, losses from associates like Air China Ltd. pushed Cathay further into the red. Air China, 18.1% owned by Cathay, racked up 28 billion yuan ($4.1 billion) in losses in the first nine months of last year, its widest-ever deficit as China doubled down on Covid restrictions.

Sounding more optimistic about the core airline’s performance, Ronald Lam, Cathay’s newly installed chief executive officer, said he was “very encouraged to see a trend of continuous improvement in our operations and financial performance in the second half.” Lam pointed to travel relaxations enabling Cathay to generate positive cash flow in the six months ended Dec. 31.

Cathay has started to benefit from the long awaited lifting of pandemic measures in Hong Kong and mainland China, its biggest market outside of the financial hub. The airline earlier projected group passenger capacity, which includes budget unit HK Express, will return to 70% of pre-Covid levels by the end of the year.

Cathay’s Hong Kong-traded shares closed up 0.5% Friday.