Cathay Pacific logs $7.6b loss in H1 amidst COVID-19

The loss is lower than the S$9.9b loss recorded in the first half of 2020.

Cathay Pacific Group suffered a $7.6b attributable loss in the first half of 2021 as it continues to deal with the impact of the COVID-19 pandemic.

This is 23% lower than the $9.9b loss it incurred in the same period last year.

“COVID-19 continued to pose significant challenges for the Cathay Group in the first half of 2021 and this continues to be the toughest period in our history, Cathay Pacific Chair Patrick Healy said in a statement, adding that new virus variants led to stricter travel and quarantine measures in Hong Kong and several of their key markets.

He said the imposition of strict quarantine measures for Hong Kong-based aircrew in February affected their service and cargo markets and significantly reduced their passenger and cargo schedules, and their monthly cash burn increased.

“Subsequent easing of some quarantine requirements for aircrew enabled us to reactivate cargo capacity and to gradually increase passenger capacity towards the end of the first half,” he said.

The loss for the first half includes impairment and related charges of $500m mainly from the 11 aircraft that are unlikely to re-enter economic service before they retire or returned to lessors and $405m restructuring costs.

Passenger revenue was severely affected by travel restrictions and quarantine requirements due to COVID-19, decreasing 92.8% year-on-year to $745m. Revenue passenger kilometres decreased by 95.8%, where it carried 157,000 passengers during the period, 96.4% fewer than in the same period last year.

Its cargo performance was also limited by capacity restrictions and quarantine requirements for crew members, as well as lower cargo capacity due to fewer passenger aircraft being flown, with revenues declining 0.6% to $11.1b compared to the first half. Available cargo tonne-kilometres fell by 31.9%, whilst total tonnage decreased by 17.7% to 549,000 tonnes.

“Revenues were strong considering the circumstances, sustained by cargo yield increases of 24.4% to HK$3.37 and record load factors of 81.4% (2020 first half: 69.3%),” Healy said.

Healy said the pandemic will still have a severe impact on their business until the borders open and travel restrictions are lifted, noting that it will only be possible when sufficiently high vaccination levels are achieved.

Cathay hopes to operate up to 30% of its pre-pandemic passenger capacity by the fourth quarter of this year and expects cargo operations to continue its strong performance in the second half. He also said that they focus on cash management and targets cash burn of less than $1b per month by the remainder of 2021.

“We remain absolutely confident in the long-term prospects of Cathay Pacific and the future of Hong Kong as a leading international aviation hub,” he said. “Our dual-brand approach, benefiting from the premium service of Cathay Pacific and the unique strengths and growth potential of HK Express, will position us well to take advantage of the recovery in the market when it happens.”