Hong Kong’s Cathay Pacific Airways Ltd. said on Monday that it expected to resume burning cash because of stricter crew quarantine measures after flagging a surprise profit in the second half of 2021 due to cost cuts and a strong cargo market.
The airline forecast it would post an annual loss of HK$5.6 billion ($719 million) to HK$6.1 billion ($784 million) for 2021, well below the average HK$10.2 billion ($1.31 billion) estimate from 12 analysts polled by Refinitiv and its HK$21.65 billion ($2.78 billion) loss in 2020.
The full-year forecast was also narrower than the first-half loss of HK$7.57 billion ($972 million), with Cathay pointing to positive cashflow generation in the second half.
However, the airline forecast it would burn through HK$1 billion ($128 million) to HK$1.5 billion ($192.6 million) of cash a month starting in February after the government tightened crew quarantine restrictions, forcing the airline to cut cargo and passenger capacity sharply.
Cathay is operating about 2 percent of its pre-pandemic passenger capacity and about 20 percent of its pre-pandemic cargo capacity in January.
Rival Singapore Airlines Ltd., which also lacks a domestic market but has less-strict travel rules, forecasts it will reach 47 percent and 45 percent of pre-COVID passenger capacity in January and February respectively.
The schedules listed on Cathay’s website for February and March appear about as light as January, with only a handful of flights per month to destinations such as London, Sydney, and Tokyo that had multiple daily flights before the pandemic. Flights to mainland China are less affected.
“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 percent more cargo flight capacity than we are currently operating,” Cathay Chief Executive Augustus Tang said in a statement.
Hong Kong, which has been pursuing a “zero-COVID” strategy in hopes of opening its border with mainland China, has suspended transit flights from most of the world.
The financial center last month introduced tighter crew quarantine rules after two Cathay crew members who broke self-isolation measures sparked a COVID-19 outbreak in the city.
The two have since been fired, arrested and charged over the breaches.
By Jamie Freed