A year can make a big difference; on 11 August 2021, at the release of its half-year results, Cathay Pacific flagged what it said was “the toughest period in our history”.
Despite narrowing operating losses, the airline remained in the grip of tight pandemic restrictions in its home city of Hong Kong, and with the threat of new coronavirus variants, it appeared there was no end in sight.
However, a year on, there is a marked shift in tone.
For one, the briefing for its half-year financial results on 10 August was held in-person, for the first time in more than two years of the pandemic.
During the briefing, the airline proceeded to talk up recruitment, returning parked aircraft, and restoring its network.
The airline took things a step further, urging the city government to “do more” in the easing of pandemic-related restrictions. Cathay chairman Patrick Healy said that while the airline welcomes Hong Kong’s decision to ease several travel restrictions to the city, “we urge them to do more”.
“We would like to see a clear roadmap showing the complete removal of all Covid-19 related restrictions for aircrew as well as passengers as soon as is feasible,” says Healy.
His comments come as Cathay anticipates an operational ramp-up in the near-term, but a lack of clarity about reopening has led to uncertainty about recovery momentum.
The Hong Kong government has not publicly responded to the comments so far.
That the airline did not call for an outright and immediate removal of all restrictions also shows it was aware of the fine political line it must tread. After all, it had been the subject of censure from the Hong Kong government at the start of the year, when the city battled its worst-ever wave of infections.
Still, the comments – repeated again by airline executives during the briefing – are a sign the airline is already turning the proverbial corner, and is ready to show – in the words of airline chief Augustus Tang – that “Cathay is back”.
The airline cut its losses for the first half of 2022, despite what it called a “particularly unfavourable” start to the year. It posted an operating loss of HK$1.3 billion ($166 million) during the period – a notable turnaround on the record HK$5.4 billion loss it made at the same stage last year. That was achieved on revenue increasing 17% year on year.
The airline also expects a stronger second-half of 2022, with projected passenger capacity to be around 25% pre-pandemic levels, and cargo capacity to be around 65%. That these levels remain so far behind 2019 capacity underscores just how tight travel restrictions have been for Cathay during the pandemic, which had no domestic market fall-back on during the crisis
CATHAY ON TRACK FOR PROFIT RETURN?
HSBC Global Research even declares Cathay could well be on track to profitability, given pent-up demand and the likelihood of restrictions easing further.
The airline has also begun hinting that it will start reactivating aircraft stored overseas, stating that it will bring the aircraft back “on the expectation that borders will reopen”. The group has 69 aircraft parked overseas – mostly in Alice Springs in Australia.
It is the first time in more than two years of the pandemic the airline has talked up fleet reactivation. Previously fleet development discussions only explain the decision to park aircraft overseas as one that is “in keeping with prudent operational and asset-management considerations”.
“This is subject to change as we continue to reassess our passenger flight capacity,” was as much as it would disclose.
Asked at the media briefing about the timeline for the return of aircraft to service, Cathay chief operations and service delivery officer Greg Hughes said: “We brought back a number of aircraft in the first half of the year. We will continue to do that. They come back on a regular basis…The speed and the pace at which we will do that will be dictated firstly, by the ability for us to add capacity.”
He doubled down on Healy’s remarks that the airline was limited by the restrictions placed on operating crew, calling it “the greatest impediment to us being able to bring aircraft back and add capacity”.
That ramp-up plans are discussed bodes well for the carrier, whose survivability through the pandemic has been called into question several times.
This time, Cathay is making is clear the one-time ‘Heart of Asia’ has found a beat yet again.