Cathay Pacific burns through cash again amid HK Covid-19 restrictions
Shares rise after the carrier reports it narrowed losses in 2021, partly thanks to severe cost-cutting
Cathay Pacific Airways is once more burning through cash as Hong Kong’s spiralling Covid-19 outbreak reduces the airline’s flying to a trickle.
The carrier will go through between HK$1bn ($128m) to HK$1.5bn every month “until conditions improve”, CEO Augustus Tang said in a note to staff on Wednesday that was seen by Bloomberg News. A Cathay representative confirmed the memo’s authenticity.
It’s a swift and bleak reversal for the city’s marquee airline. Tang said in his note that Cathay’s monthly operating cash burn was as high as HK$3bn in the first half of 2020 — as the pandemic laid waste to global aviation. The metric had become “marginally positive” in the second half of 2021, he said.
Flight bans and quarantine restrictions while Hong Kong fights Covid-19 have reduced Cathay’s passenger flying to 2% of pre-pandemic capacity, the airline said on Wednesday as it reported a net loss for 2021.
Cathay’s “available unrestricted liquidity” was HK$30.3bn at the end of 2021, Tang said in his note.
“This healthy liquidity position gives us great confidence that we can overcome the ongoing challenges and emerge from this crisis as a more focused, efficient and more competitive airline,” he said.
The airline has become a symbol of the toll Hong Kong’s isolationist approach to the virus is exacting on the city, with borders effectively shut for the duration of the pandemic and lengthy quarantines the norm.
Its staff have been blamed by authorities for bringing Covid-19 into Hong Kong, and subject to frequently shifting protocols that made it difficult to continue running flights. Aircrew face varying levels of quarantine to meet Hong Kong’s entry requirements, and are also subject to restrictions when in overseas ports.
Earlier, Cathay Pacific said its crews and staff spent more than 73,000 nights in quarantine hotels and the city’s Penny’s Bay Covid-19 isolation facility in 2021. That adds up to the equivalent of 200 years.
Cathay’s crews took more than 230,000 Covid-19 tests in 2021, with only 16 positive cases, according to the airline.
The eye-catching numbers featured in its annual results out Wednesday. Cathay said its net loss narrowed to HK$5.5bn ($703m) in 2021 from a record HK$21.6bn the previous year, partly thanks to cost-cutting, including furloughs, early retirement programmes, lower salaries and unpaid leave for staff.
Non-fuel costs fell about 24% to HK$37.7bn.
Cathay shares rose 4.7% Wednesday, their biggest daily gain since December 7.
On Wednesday, Hong Kong CEO Carrie Lam said plans to test the entire population for Covid-19 in March has been indefinitely postponed as the city prioritises vaccinating the elderly.
The city is still making plans for the mandatory citywide test, she said in her first major briefing in two weeks.
Bloomberg News. More stories like this are available on bloomberg.com
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