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  • Joe Breitfeller

Cathay Pacific Releases 2021 Performance Update With Substantially Reduced Losses Versus 2020

Cathay Pacific has today released and update on their financial performance for 2021 with an expected consolidated loss of HK $5.6 to 6.1 billion (US $719 to $784 million), compared to a 2020 loss of HK $21.6 billion (US $2.8 billion).


Cathay Pacific Boeing 777-300ER - Courtesy Cathay Pacific

On Monday (January 24, 2022), Cathay Pacific released an update of their 2021 financial performance for the year ending December 31, 2021, as well as their 2022 outlook. The Hong Kong-based carrier expects to report a substantially reduced consolidated 2021 loss of between HK 5.6 to 6.1 billion (US $719-$784 million), compared to a loss of HK 21.6 billion (US $2.8 billion) for the full year ending December 31, 2020. The financial improvement for FY21 is largely attributable to strong cargo demand, high cargo yield and load factors, combined with a focus on strict and effective cost management. Additionally, the FY20 result included the recognition of one-off items including impairment charges and restructuring costs, which were reduced significantly in 2021. Cathay Pacific will report the Group’s annual results for the year ending December 31, 2021 in March 2022.


In Monday’s announcement, Cathay Pacific’s Chief Executive Officer, Augustus Tang, said,


“Passenger travel remained extremely subdued throughout 2021, as a result of ongoing travel restrictions and strict quarantine requirements. We flew 717,059 passengers during 2021, getting people home, reuniting many of them with family, and helping students travel to and from school or university overseas. This compares to the 4.6 million passengers that we flew in 2020 and 35.2 million passengers that we flew in 2019.


“While passenger travel continued to be acutely affected, cargo demand was strong throughout the year. We carried approximately 1.3 million tonnes of cargo in 2021, which compares to around 1.3 million tonnes in 2020 and 2 million tonnes in 2019. Throughout 2021, we deployed all available capacity to meet the consistently high demand, achieving strong yield and high load factors and transporting a wide range of goods including daily necessities, fresh produce, electrical items and pharmaceutical products.


“Despite quarantine restrictions and operational challenges, Cathay Pacific surpassed the milestone of 120 million COVID-19 vaccines carried in 2021. We carried more than 13.3 million doses in a single day. As a group, our airlines have carried more than 165 million doses of different COVID-19 vaccines around the world since the pandemic began.


“Having worked hard to tackle the challenges presented by the COVID-19 pandemic, taken decisive actions to create a more focused, efficient and competitive business and responded to strong cargo demand, we have reduced operating cash burn from the HK$2.5-3.0 billion range in the first half of 2020 down to marginally cash generative in the second half of 2021.”


Commenting on the airline’s 2022 outlook, Cathay Pacific’s CEO, Augustus Tang added,


“In late December and then early January, the Hong Kong SAR Government further tightened aircrew quarantine requirements and travel restrictions. These measures will have a significant impact on our passenger and cargo flight capacity. While we are fully committed to increasing our cargo capacity when conditions allow and to upholding Hong Kong’s international aviation hub status, for the month of January 2022, cargo has reduced to 20% of its pre-pandemic capacity and passenger flights have reduced to around 2% of their pre-pandemic capacity.


“Regrettably, the capacity reduction will have an impact on Cathay Pacific’s business and we have been evaluating the potential impact of these measures on our operations and cost base. According to our preliminary assessment, we expect these capacity levels to result in an operating cash burn of HK$1.0-1.5 billion per month from February.


“Until conditions improve, we are doing everything in our power to maximise capacity, and estimate that mitigation measures to increase crew resources will enable us to operate approximately an additional 5% more cargo flight capacity than we are currently operating.


“We continue to operate freighter services to the Chinese Mainland and regional destinations, as well as a daily freighter operation to North America. The shipment of goods to and from Europe and the Southwest Pacific is being served by passenger aircraft carrying only cargo.


“On the travel side, we will strive to maintain passenger connectivity with key destinations, although at reduced frequencies, under the confines of the place-specific and flight-specific suspension mechanism. While passenger flights to the Chinese Mainland will remain largely unaffected, capacity to the rest of the Cathay Pacific network will see a reduction to ensure continued compliance with the latest Government measures. We will also leverage the capacity provided by our low-cost subsidiary HK Express to maintain connectivity with a number of regional destinations.


“As Hong Kong’s home airline, we remain resolutely committed to keeping the city safely connected with the world. We are exploring all options to keep the flow of people and goods moving despite the considerable challenges we continue to face. We also want to reiterate that the health and wellbeing of our people, customers and the Hong Kong community remain our top priority.”


Cathay Pacific's December 2021 and Full Year 2021 Traffic and Capacity - Courtesy Cathay Pacific

Source: Cathay Pacific