The Cathay Pacific Group has reported continuing fallout from the COVID-19 pandemic for the first half of 2021 due to the emergence of new virus variants that have led to the tightening of travel restrictions and quarantine requirements in Hong Kong and several of the airline’s key markets.
Cathay Group’s attributable loss was HK$7,565 million in the first half of 2021 (2020 first half: loss of HK$9,865 million). Cathay Pacific’s loss after tax was HK$5,031 million in the first half of 2021 (2020 first half: loss of HK$7,361 million), and the share of losses from subsidiaries and associates was HK$2,534 million (2020 first half: loss of HK$2,504 million).
In February, Hong Kong introduced strict quarantine requirements for Hong Kong-based aircrew, which impacted the airline’s ability to service passenger and cargo markets and as a result the airline reduced its passenger and cargo schedules significantly that increased its monthly cash burn.
Subsequent easing of some quarantine requirements for aircrew has enabled Cathay to reactivate cargo capacity and to gradually increase passenger capacity towards the end of the first half of this year.
The loss for the first half of 2021 includes impairment and related charges of HK$500 million mainly relating to 11 aircraft that are unlikely to re-enter meaningful economic service before they retire or are returned to lessors and HK$403 million restructuring costs. This compares to impairment and related charges for 16 aircraft (HK$1,242 million) and certain airline service subsidiaries’ assets (HK$1,223 million) in the first half of 2020. Adjusting for these exceptional items, the Cathay Group’s attributable first half loss was HK$6,662 million (2020 first half: loss of HK$7,400 million), and Cathay Pacific’s first half loss was HK$4,168 million (2020 first half: loss of HK$6,080 million).
Passenger revenue decreased by 92.8% to HK$745 million in the first half of 2021 compared with the first half of 2020. Revenue passenger kilometres (RPK) decreased by 95.8%. Passenger capacity decreased by 85.0%.
Cathay carried 157 thousand passengers in the first half, an average of 868 passengers per day, 96.4% fewer than in the same period in 2020. The load factor was 18.9%, compared with 67.3% in the first half of 2020.
Cargo performance was limited by capacity restrictions resulting from crew quarantine requirements and lower cargo capacity as a result of fewer passenger aircraft being flown. Available cargo tonne kilometres (AFTK) decreased by 31.9%. Total tonnage decreased by 17.7% to 549 thousand tonnes. Revenues were HK$11,112 million, a decrease of 0.6% compared to the first half of 2020. Revenues were strong considering the circumstances, sustained by cargo yield increases of 24.4% to HK$3.37 and record load factors of 81.4% (2020 first half: 69.3%).
At 30th June 2021, Cathay’s available unrestricted liquidity balance was HK$32.8 billion. During the first half of the year the group raised HK$6.74 billion from a convertible bond issue and US$650 million (equivalent to HK$5.1 billion) from a straight bond issue under its medium-term note programme. The Hong Kong Government also agreed to extend the drawdown period of the HK$7.8 billion loan facility made available to the Group as part of its 2020 recapitalisation by 12 months to June 2022.
Cathay states that it hopes to operate up to 30% of our pre-pandemic passenger capacity by the fourth quarter of 2021, but this is dependent on operational and passenger travel restrictions being lifted. Cargo operations are expected to continue to perform strongly in the second half of the year.