Cathay Pacific is poised to lose nearly $200 million a month from February, the embattled Hong Kong carrier reported on January 24, as the city’s Covid-19 restrictions have seen cargo flights slashed.
Hong Kong has maintained some of the world’s harshest travel restrictions, isolating a city that was once one of the world’s largest logistics and transportation hubs.
Air crew quarantine measures were further tightened following the discovery that two Covid-positive Cathay staff had breached home quarantine – which resulted in the city’s first outbreak of the hyper-contagious Omicron variant.
By January, Cathay’s cargo flights – one of the few sectors where the airline was making cash – had reduced to 20 per cent of its pre-pandemic capacity, while passenger flights dropped to two per cent, its CEO Augustus Tang said on January 24.
“According to our preliminary assessment, we expect these capacity levels to result in an operating cash burn of HK$1.0-1.5 billion [US$128-193 million) per month from February.”
Tang’s forecast means the losses for 2022 could outstrip last year’s total consolidated loss of approximately HK$5.6-6.1 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 especially vulnerable because it has no domestic market to fall back on, and is based in a finance hub that has embraced mainland China’s “zero-Covid” plan.
The airline flew some 717,000 passengers in 2021, Tang said – a far cry from the 35.2 million people transported in 2019.
Strong cargo demand was what sustained the carrier – it flew 1.3 million tonnes in 2021, compared to two million two years before.
The Cathay flight attendants who breached home quarantine measures face up to six months in jail if convicted.
Hong Kong leader Carrie Lam said last week that authorities were investigating whether Cathay Pacific has complied with 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 over 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 Penny’s Bay government quarantine camp.