Cathay Pacific To Burn Cash As Crew Quarantine Rules Bite
Hong Kong's Cathay Pacific Airways Ltd has said that it expects 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 that it will post an annual loss of HK$5.6 billion to HK$6.1 billion for 2021, well below the average HK$10.2 billion estimate from 12 analysts polled by Refinitiv and its HK$21.65 billion loss in 2020.
The full-year forecast is also narrower than the first-half loss of HK$7.57 billion, with Cathay pointing to positive cashflow generation in the second half.
However, the airline forecast that it will burn through HK$1 billion to HK$1.5 billion 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 approximately 2% of its pre-pandemic passenger capacity and approximately 20% 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 that it will reach 47% and 45% 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% 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 centre in December 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.