Cathay Pacific warns of annual losses despite rising demand

Improving travel demand following the relaxation of Hong Kong Covid quarantine curbs helped lift Cathay Pacific carryings last month but the group still expects a “substantial” loss for the year.

The rule change at the end of September improved sentiment to travel, particularly to other Asian destinations.

October, passenger flight capacity increased 32% compared with September as the group operated 21% of its pre-pandemic levels. 

Passenger numbers increased to nearly 13,000 per day, up from over 8,800 in September, and load factor reached about 74%.

Total carryings for the month reached almost 401,000 – still 85% down on October 2019.

The group previously announced the addition of about 3,000 passenger flight sectors until the end of December.

It is on track to achieve a target of operating up to a third of pre-pandemic passenger capacity by the end of 2022. 

Chief customer and commercial officer Ronald Lam said: “Travel demand for the rest of 2022 continues to improve and is promising for the Christmas holiday period.

“Following the Hong Kong SAR government’s lifting of quarantine requirements for arrivals entering Hong Kong at the end of September, travel sentiment out of Hong Kong improved significantly in October. 

“Demand for the first half of October mainly stemmed from flights to Bangkok, Singapore and Seoul. We then saw a surge in demand for travel to Japan when its quarantine requirements for arrivals were relaxed on 11 October.

“We increased our regional flight frequencies, in particular to destinations in Japan, in October. We also resumed services to Madrid, Milan, Bengaluru, Dubai and Kathmandu last month.”

He added: “Earlier this year, we said that we were targeting to be operating cash generative from August onwards. Since then, further adjustments to travel restrictions and quarantine requirements have come into effect in Hong Kong. As such, it is now our expectation that the second half of 2022 will be operating cash generative overall.

“At the same time, our second-half 2022 results for our airlines and subsidiaries are expected to see a marked improvement over our first-half 2022 results, although still a loss overall for the full year of 2022. 

“However, the results from associates, the majority of which are recognised three months in arrears, and which in some cases have already been announced, will include significant losses. As a result, a substantial loss for the Group, including airlines, subsidiaries and associates, is expected for the full year of 2022.”

Looking forward, Lam said: “Earlier this week, the group – comprising passenger airlines Cathay Pacific and HK Express – announced that it anticipates it will be operating around 70% of pre-pandemic passenger flight capacity by the end of 2023, with an aim to return to pre-pandemic levels by the end of 2024, ahead of the Asia-Pacific traffic forecast issued by Iata. 

“We look forward to being a positive driving force behind the revival of Hong Kong’s international aviation hub status.”