Cathay Pacific expects the aviation sector to bounce back in the next two years.
In a statement welcoming the Hong Kong government's extension of its HK$7.8 billion bridge loan, the chief of the airline sounded optimistic about the recovery of the airline industry beyond the disruptions caused by Covid-19.
"The unprecedented impact of the pandemic has necessitated some very difficult decisions, namely our restructuring in 2020, but through this and our recapitalisation, we have created a more efficient, more competitive and more focused business," said Augustus Tang, Cathay's chief executive officer.
"We have already recommenced hiring as we plan for the anticipated recovery in Hong Kong and global aviation in the 18-24 month period ahead," he added, noting that Cathay Pacific remains committed to rebuilding connectivity at the Hong Kong hub — one of the busiest airport in the world.
Recovery prospects, less cash burn
Tang said Cathay Pacific Group's liquidity remains at a "healthy level," standing at HK$30.3 billion as of the end of 2021, compared to HK$28.6 billion at the end of 2020.
The airline chief noted that following the recent adjustments to the Hong Kong government's travel restrictions and quarantine requirements, the airline is "progressively adding back capacity" — and Cathay expects this to have a "positive impact" on the airline's business.
"We have been evaluating the potential benefit on our operations and cost base. Based on our preliminary assessment, we are targeting to reduce operating cash burn to less than HK$0.5 billion per month for the next few months," Tang added.
Cathay Pacific and the Hong Kong government agreed to extend the drawdown period of the HK$7.8 billion loan facility for a further 12 months until June 8, 2023.
The Government provided the bridge loan facility to Cathay Pacific as part of the HK$39 billion recapitalisation announced on June 9, 2020, to help the airline maintain its competitiveness and operations amid the industry-wide downturn due to Covid-19.
"We are grateful to the Hong Kong SAR Government for its ongoing support, and its continued confidence in the long-term future of Cathay Pacific despite the short-term challenges of the pandemic. Since the beginning of the Covid-19 crisis, we have remained focused on prudent cash management," the Cathay chief said.
"Despite the difficult operational environment, we have not had to draw down the facility over the past 12 months. The further extension of the drawdown period is greatly appreciated and will provide us with the flexibility to manage our liquidity position," Tang added.
