Cathay Pacific delivers upbeat outlook despite $637mn first-half loss

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Hong Kong flagship airline Cathay Pacific said it expects to stop burning cash in the second half as the group narrowed its losses and delivered its most positive outlook in years after the city shortened its quarantine requirements.

In results published on Wednesday, the Hong Kong-listed airline reported a loss of HK$5bn ($637mn) for the first half of 2022, compared with a HK$7.6bn loss over the same period last year and said it was optimistic about the outlook for the rest of the year.

“On the expectation that borders will reopen, our teams have been actively preparing to meet the rising global demand for travel,” Cathay’s chair Patrick Healy told reporters. The company is confident that its “airlines and subsidiaries will see a stronger second-half than first-half performance”.

Cathay said it expects “positive cash flow” in the second half of 2022, while HSBC analysts said they believe the airline returned to profit in July.


In March, Cathay reported that it was burning up to HK$1.5bn a month because of strict quarantine rules for international travellers.

From left: chief financial officer Rebecca Sharpe, chief executive Augustus Tang, chair Patrick Healy and chief operations officer Greg Hughes © Paul Yeung/Bloomberg

The airline has forecast that by the end of the year, passenger traffic will rise to 25 per cent of pre-pandemic levels and cargo capacity to 65 per cent.

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As of June, it was operating at only 11 per cent of pre-pandemic passenger capacity and 56 per cent of cargo traffic. Higher cargo revenues have been an important factor in its improved performance.

Its rival Singapore Airlines, which was operating at about 60 per cent of pre-pandemic passenger traffic in June, has estimated passenger capacity will reach 81 per cent of pre-pandemic levels by December.

Cathay also been suffering from an exodus of pilots prompted by the tough quarantine rules and is looking to hire 4,000 staff including pilots by next year.

It has been calling for Hong Kong officials to “urgently provide a clear road map” on scrapping Covid border restrictions to encourage travellers back and protect the territory’s status as an aviation hub.

“Hong Kong has fallen far behind other international aviation hubs and our regional competitors have recovered much faster from the disruptions caused by the global pandemic,” said Healy.

This week, the territory cut its quarantine period for international arrivals to three days in a hotel followed by four days of home monitoring, down from seven days at a hotel.

Achim Czerny, associate professor of transport economics at Hong Kong Polytechnic University, said 25 per cent of pre-pandemic passenger levels “is still low, but it should be feasible given that travel restrictions have been substantially relaxed recently”.

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Parash Jain, head of Asia transport research at HSBC, wrote in a report this week: “Complete withdrawal of quarantine is likely the end game and a near-term possibility.

“This would be a boon for Cathay’s capacity ramp-up and in time for the Christmas holiday travel season.”

HSBC has forecast a HK$4bn profit for the airline for the second half of 2022.

Investors have also remained optimistic. Cathay shares have outperformed regional rivals, rising 34 per cent over the past year. Singapore Airlines shares are up 6 per cent over the same period.

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