Cathay Pacific Group narrowed its half-yearly losses on the back of significant cost-cutting, but has warned that the pace and timing of a travel recovery “remain uncertain”.
The Hong Kong-based airline group, which comprise mainline Cathay Pacific Airways and low-cost unit HK Express, reported an operating loss of HK$5.4 billion ($699 million) for the six months ended 30 June. This compares to the record HK$8.7 billion half-year loss it posted in 2020.
Despite narrowing its losses, Cathay group chairman Patrick Healy says the first half of 2021 “continues to be the toughest period in our history”, because of the emergence of new coronavirus strains and continued travel restrictions in key Cathay markets.
Stricter crew quarantine measures introduced in February also impacted Cathay’s operations and increased monthly cash burn, says Healy.
Hong Kong subsequently eased aircrew quarantine measures, which allowed the airline group to ramp up cargo and passenger operations.
For the period, the embattled group reported a 43% decline in revenue to HK$15.9 billion. Mainline carrier Cathay’s passenger revenue fell the sharpest — at nearly 93% year on year — to just HK$745 million, as total passenger capacity over the period plunged 85%.
Cathay’s cargo revenue dipped 0.6% year on year to HK$11.1 billion, on a 31.9% decrease in available FTKs.
Still, cargo is expected to continue to “perform strongly” for the rest of the year, says Healy.
Group expenses for the period fell nearly 40% to HK$20.4 billion, led by steep declines in fuel, maintenance as well as inflight service costs.
The group shored up its cash during the period, ending the half-year with HK$9.23 billion in cash and cash equivalents, about HK$3 billion higher than what it began the year with.
It was also higher compared to the same period in 2020, when it ended the half year with HK$6.1 billion in cash and cash equivalents.
Cathay pledged to keep monthly cash burn low for the rest of the year. Says Healy, in remarks accompanying the financial results: “We will maintain our focus on prudent cash management, targeting cash burn of less than HK$1.0 billion per month for the remainder of the year.”
Separately, low-cost unit HK Express widened its half-year after-tax losses — from HK$779 million in 2020 to HK$976 million — as it suspended its operations during the period.
Cargo subsidiary Air Hong Kong posted a HK$374 million after-tax profit, a 3% year-on-year increase, helped by a strong freight market.
Cathay ended the period with 196 aircraft in its fleet, three fewer jets than at the start of 2021. It took delivery of four jets during the period: two Airbus A321neos and two A350-1000s. It also removed seven aircraft: three A320ceos, one A321ceo, as well as three Boeing 777-300ERs. HK Express’ fleet remain unchanged at 28 aircraft, while Air Hong Kong took delivery of two more A330 freighters, bringing the total fleet to 14 jets.
