Cathay Pacific Group expects to post a “substantial” full-year loss for 2022, despite being cash positive and seeing good recovery progress through the year-end.
Group chief customer and commercial officer Ronald Lam says that while Cathay expects a “marked improvement” in earnings for the second half of 2022 as its Hong Kong hub gradually reopens to travel, results from its associated companies “will include significant losses”.
“As a result, a substantial loss for the group, including airlines, subsidiaries and associates, is expected for the full year of 2022,” says Lam, in comments made at the release of Cathay’s October traffic results.
The airline group reported a HK$1.3 billion ($166 million) operating loss in the first six months of the year. In 2021, it was HK$1.4 billion in the red at the operating level.
Lam says the airline expects to be cash positive overall for the second half of 2022, in line with an earlier target of August 2022.
Cathay carried close to 401,000 passengers in October, which was about 15% pre-pandemic levels.
Traffic jumped five-fold year on year but was only about 20% pre-pandemic 2019. Cathay doubled capacity versus 2021, but this remains at only 21% of pre-pandemic levels.
The airline says travel demand out of Hong Kong improved ”significantly” in October, the first full month of operations since Hong Kong lifted quarantine requirements for all arriving travellers.
“Demand for the first half of October mainly stemmed from flights to Bangkok, Singapore and Seoul. We then saw a surge in demand for travel to Japan when its quarantine requirements for arrivals were relaxed on 11 October,” says Lam.
However, the airline reported a softening of cargo demand, and cut freight capacity by 10% year on year.
Against 2021’s higher base, Cathay saw its tonnage carried drop about fifth year on year. The figure is about 5% higher compared to September’s levels, the carrier adds.
Lam says: “In terms of cargo, global economic headwinds and anti-pandemic measures on the Chinese Mainland continue to impact trade flows and production.”
“Our expanded network in Europe was a bright spot with double-digit month-on-month growth in October as we resumed more of our passenger services. This provided our cargo customers with more options, especially for specialised shipments such as pharmaceuticals.”
The carrier on 14 November provided an update on near-term capacity, projecting a return to pre-pandemic levels around the end of 2024. By end-2023, the airline expects to operate at around 70% pre-pandemic capacity.