Cathay Pacific expects the recent easing of quarantine rules in Hong Kong to boost its performance through the second half of the year with sight set on more passenger flights and additional air cargo capacity.
In reporting the company's financial results for the first six months of the year ended on June 30, Patrick Healy, Cathay Pacific chairman, noted an "extremely difficult start" to 2022 with the lingering impact of the Covid-19 pandemic.
"The first half of 2022 bore similarities to the first half of 2021. The spread of a new COVID-19 variant, Omicron, led to increasingly stringent travel and operational restrictions, most notably in Hong Kong and the Chinese Mainland, which severely constrained our ability to operate flights and greatly affected the demand for travel," Healy said.
Narrower loss recorded in H1
He added that quarantine rules for Hong Kong-based aircrew as well as the route-specific flight-suspension mechanism were also further tightened in early January — resulting in a "particularly unfavourable first few months" of 2022.
As a result, Healy said the airline took the step to significantly reduced its passenger and cargo flight capacities.
The adjustments to these restrictions from May 1 were positive developments for Cathay, allowing the airline to resume flights to more destinations in May and June. Cathay also resumed a full freighter schedule.
This boost resulted in the improvement of losses that the airline incurred for the period.
In the report, Cathay Pacific said the Group revenue for the first half of 2022 reached HK$18,551 million, up 17% year on year from the HK$15,854 million recorded during the same period in 2021.
Meanwhile, the loss attributable to the Cathay Pacific Group — which includes Cathay Pacific, its subsidiaries and its associates — was HK$4,999 million in the first half of 2022, a big improvement from the HK$7,565 million recorded in the first half of 2021.
For the January to June period, Healy noted that both passenger and cargo flights were affected by the quarantine restrictions in Hong Kong.
Healy said available cargo tonne kilometres (AFTK) decreased by 31.0% and total tonnage also decreased by 4.2% to 526 thousand tonnes.
"Our cargo performance was similarly affected by restrictions and quarantine requirements for Hong Kong-based aircrew," the Cathay Pacific chief said, although noting that cargo revenue was up 9.3% year-on-year to HK$12,148 million during the period.
Positive prospects for H2
"Looking ahead, the most recent adjustments to quarantine arrangements for arriving passengers are expected to improve travel sentiment," Healy said.
"We are targeting to progressively increase passenger flight capacity up to a quarter and cargo flight capacity to 65% of the pre-pandemic level by the end of 2022," he added.
"This gives us confidence that our airlines and subsidiaries will see a stronger second-half than first-half performance. However, the results from associates (the majority of which are reported three months in arrears) will remain very challenging," Healy said.
The Cathay Pacific chairman said this allows the airline to set a more positive performance in the second half — although the ongoing Covid-19 restrictions in Hong Kong will still continue to restrict Cathay's operations.
"As the home carrier of Hong Kong, we are entirely focused on resuming connectivity between Hong Kong and the world. While we are fully committed to supporting our home city, our ability to operate more flight capacity continues to be severely constrained by a bottleneck on crewing resources under the existing quarantine requirements," Healy added.
"We will only be able to operate more flight capacity when the existing stringent travel restrictions and quarantine requirements applicable to Hong Kong-based aircrew are lifted."
