Cathay Pacific reduced its annual losses in 2021, but the tougher Omicron restrictions have made for a tough start to 2022 for the Hong Kong-based airline.
The airline reported an attributable loss for 2021 of HKD5.5 billion ($703 million), a sharp reduction from the 2020 loss of HKD21.6 billion ($2.8 billion).
The airline also said in a statement on March 9, 2022 that it actually made a profit of just over HKD2 billion in the second half of the year, helped by a very strong cargo market and tight cost control.
Cargo revenues rose 28% in 2021 to HKD35.8 billion ($4.6 billion).
However, chairman Patrick Healy said 2022 was proving tough, particularly in light of new restrictions in Hong Kong.
“We are now in the third month of 2022 and it goes without saying that the start of this year has been even tougher than last. The emergence of the highly transmissible Omicron variant has led to the tightest restrictions Hong Kong has implemented to date,” he said in a presentation for the results.
Cathay therefore expects to operate only about 2% of its pre-COVID-19 passenger flight capacity, while cargo flight capacity is also expected to be at less than one-third of pre-crisis levels due to the constraints placed on its business.
Cathay Pacific noted that the Hong Kong government had increased quarantine requirements for Hong Kong-based crews, especially those operating cargo flights, and temporarily banned flights from nine countries, including Cathay’s major markets in the UK and US.
“We are trying our best to maintain our passenger and cargo networks as far as possible and will try to increase our cargo capacity as much as practicable,” Cathay stated in the 2021 financial report.
While Cathay had managed to halt its cash burn over the course of 2021, Healy said the latest restrictions mean Cathay expects burn cash “in the range of HKD1.0-1.5 billion per month with effect from February until conditions improve”.
“Our profitable performance in the second half of 2021, despite all the travel restrictions and operational constraints we were working under, demonstrate beyond doubt that the team has achieved that,” Healy noted. “It also gives us a glimpse of a brighter future and is an indication of what we can achieve once operational constraints can be lifted and the recovery begins.”