Cathay Pacific’s H1 losses narrow on higher cargo yield and cost-cutting

Hong Kong flag carrier Cathay Pacific Airways Ltd (00293) on Wednesday reported a net loss attributable to shareholders of HK$ 7.57 billion for the first half of 2021, down by nearly a quarter from a year ago due to reactivated cargo business and decreased costs amid the impact of COVID-19.

Tightening travel restrictions and quarantine requirements in Hong Kong and other main markets caused great challenges to the company, Cathay’s Chairman Patrick Healy said.

“COVID-19 will continue to have a severe impact on our business until borders are reopened and travel restrictions are lifted,” Mr. Healy told a news conference after the results were announced, adding that the sudden increase in coronavirus infections in mainland China recently made the situation more unpredictable than previously.

Cathay said its first-half losses narrowed 23.3% from a loss of HK$ 9.87 billion the same period a year ago. However, its total revenue for the six-month period dropped about 43% to HK$ 15.9 billion under the COVID-19.

Shares of Cathay rose 3.55% to close at HK$ 6.42 after the results, outperforming a 0.2% gain on the benchmark Hang Seng Index.

Passenger service remained badly affected in the first half of the year as the revenue plunged 93.2% to HK$ 748 million. Revenue passengers carried dropped 96.4% to 157,000, and passenger capacity decreased 85% compared to the prior year.

Basic loss per ordinary share shrunk 46.5% to 122.1 HK cents, compared to 228.1 HK cents in the previous year, the company said in a statement.

However, Cathay said it saw a 24.4% surge in cargo yield and only a 0.6% decrease in the revenue of cargo business during the first six months of 2021, which helped mitigate the company’s losses.

Its total operating expenses decreased 39.2% compared to 2020, with a 33.4% drop in staff expenses due to measures of unpaid leave, voluntary separation and early retirement schemes. The cost cutting moves followed the company’s reduction of nearly 8,500 positions around the world and ended its Cathay Dragon brand last year.

For the rest of the year, the company expects to see a strong performance in its air cargo service with a cash burn of less than HK$ 1 billion per month.

For passenger business, Cathay expected increasing demand from students going abroad both from Hong Kong and mainland China and the company had increased passenger capacity to deal with student traffic in August and the first half of September, said Ronald Lam, Cathay’s chief customer and commercial officer, in the news conference.

Cathay said a total of 88% of its employees based in Hong Kong have received or booked vaccination, including 99% of the pilots and 91% of aircrews.