Cathay Pacific Closes Year Strongly But Says Full COVID Recovery Not Until End Of 2024

Once one of the world’s most successful airlines, Hong Kong-based Cathay Pacific has suffered more than most in the past few years. Apart from the pandemic’s impact, the Special Administrative Region of China was beset by unrest and riots before Covid took hold.

On Friday, Cathay Pacific (Cathay) released its December and 2022 full-year traffic results, bringing hope for this Year of the Rabbit. One of the last major regions to rejoin global aviation networks, Cathay has seen a surge in demand since restrictions were eased late last year but still has an enormous amount of ground to make up. Cathay Pacific CEO Ronald Lam remains grounded about where the airline is at on the road to recovery, saying on Friday:

“We remain fully committed to restoring connectivity and capacity at our home hub. As a Group, which includes passenger airlines Cathay Pacific and HK Express, we anticipate we will be operating about 70% of pre-pandemic passenger flight capacity by the end of 2023 with the aim of returning to pre-pandemic levels by the end of 2024.”

A long way to go

Photo: Simple Flying

The airline carried 801,088 passengers in December, nearly nine times more than in December 2021, but just 26.7% of pre-COVID 2019 levels. Similarly, revenue passenger kilometers were down by 68.4% and capacity, as measured by available seat kilometers, was down by 67.8% compared to December 2019. Speaking about the results, Lam said:

“December saw a drastic uptick in travel demand with Christmas being the first major holiday since travel restrictions in Hong Kong were lifted, although we were still only operating about 32% of pre-pandemic passenger flight capacity levels.”

Cathay added more destinations in December, including Sapporo, Fukuoka, Penang and Dhaka, ending the year with nearly 60 destinations, double the 29 it flew to in January 2022. The peak demand came for short-haul leisure destinations as the airline added more frequencies on the popular routes.

Where to from here?

Photo: Bradley Caslin/Shutterstock

Cathay does not release its annual results for the year ended December 31st until March, but Friday’s announcement included some estimates of the full-year results. Based on a preliminary review of unaudited management accounts and currently available information, the Cathay Pacific Group expects to record a consolidated loss attributable to shareholders of approximately HK$6.4-7.0 billion ($817-$893 million). In 2021 the attributable loss to shareholders was HK$5.5 billion ($702 million).

Encouragingly Cathay said that the second-half results for the Groups airlines and subsidiaries “improved markedly” over the first half, making a “small loss” in the full year of 2022. It added that “the results from associates” include significant losses. Lam said that the relaxation of travel restrictions and quarantine requirements in Hong Kong enabled the airline to be “operating cash generative” in the year’s second half.

Cathay says it will start 2023 positively, with demand remaining strong in January and the Chinese New Year period, driven by leisure traffic from Hong Kong. The relaxation of travel restrictions in mainland China will also boost Cathay, with the airline aiming to operate more than 100 return flights weekly to and from 14 cities in China by the end of February.

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