Cathay Pacific says ‘cash burn’ will get worse with Hong Kong restrictions
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Hong Kong (AFP) – Cathay Pacific is set to lose nearly $200 million a month from February, the struggling Hong Kong carrier reported on Monday, as the city’s Covid-19 restrictions saw cargo flights curtailed.
Hong Kong has maintained some of the world’s toughest travel restrictions, isolating a city that was once one of the world’s biggest logistics and transport hubs.
Aircrew quarantine measures have been further tightened after two Covid-positive Cathay staff were found to have breached home quarantine – leading to the first outbreak of the hyper-contagious variant of Omicron in the city .
In January, Cathay’s cargo flights – one of the few sectors where the airline was making money – had been reduced to 20% of its pre-pandemic capacity, while passenger flights had fallen to 2% , CEO Augustus Tang said Monday.
“Based on our preliminary assessment, we expect these capacity levels to result in an operating cash burn of HK$1.0-1.5 billion ($128-193 million) per month beginning in February.”
Tang’s forecast means losses for 2022 could exceed last year’s total consolidated loss by around HK$5.6 billion to 6.1 billion, according to Cathay’s report.
Like most international carriers, Cathay has been hammered as the pandemic wipes out most international travel.
But the airline is particularly vulnerable because it has no domestic market to fall back on and is based in a financial hub that has embraced mainland China’s “zero-Covid” plan.
The airline carried some 717,000 passengers in 2021, Tang said – a far cry from the 35.2 million people carried in 2019.
Strong cargo demand was what sustained the carrier – it carried 1.3 million tonnes in 2021, up from two million two years earlier.
Cathay flight attendants who breached home quarantine measures face up to six months in jail if found guilty.
Hong Kong leader Carrie Lam said last week authorities were investigating whether Cathay Pacific had complied with the regulations and could face legal action.
Chairman Patrick Healy argued that a “tiny minority” of rule breakers should not overshadow Cathay’s contributions to Hong Kong.
In 2021, the airline’s crew spent more than 62,000 nights in quarantine hotels, he said, adding that 1,000 of their staff were subjected to more than 11,000 nights in the camp. Penny’s Bay government quarantine.
© 2022 AFP