Hong Kong’s Cathay Pacific posts loss of HK$6.5 billion for 2022, but vows to rebuild brand

Hong Kong’s Cathay Pacific Airways on Wednesday posted a bigger loss of HK$6.5 billion (US$828 million) for 2022, 18.5 per cent higher than the year before, but vowed to focus on rebuilding its brands over the coming months.

The figure marked a continued decline for the city’s flagship carrier after it sustained losses of HK$5.5 billion in 2021.

But profits for the company’s core airlines operations rebounded to HK$2.26 billion during the last six months of 2022, when Hong Kong began easing Covid-related travel curbs, compared with a loss period from a year ago.

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Cathay chairman Patrick Healy said the group had experienced three challenging years during the pandemic due to stringent travel restrictions, but was working to rebuild the airline.

“We are focused on reconnecting. This means reconnecting Cathay Pacific with Hong Kong, the Greater Bay Area and the Chinese Mainland, as well as reconnecting Hong Kong with the world,” he said.

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The airline carried a total of 2.8 million passengers in 2022, making for a daily average of 7,682, and marking a 291 per cent increase from the previous year.

Revenue from cargo flights remained a breadwinner for the airline at HK$26.9 billion, despite a 16 per cent decrease from 2021.

Last year’s performance reflected a loss of HK$1.5 billion during the last six months of 2022 and losses of HK$4.9 billion during the first half.

Cathay attributed the full year’s poor results to HK$6.3 billion in losses sustained by associate companies, which had snowballed from losses of HK$1.7 billion in 2021.

Last year’s revenue grew 12 per cent to HK$51 billion from a year earlier.

Despite the airline generating positive cash flow during the second half of 2022, it attributed the year’s net loss to deficits by associated companies.

Cathay said it had HK$27.2 billion in liquidity as of December 31.

The company added it would aspire to become the preferred airline for fliers travelling to and from the bay area, referring to Beijing’s ambitious initiative to link Hong Kong, Macau and nine other southern Chinese cities.

Passenger flights in December operated at around 32 per cent of the month’s pre-pandemic capacity, falling far below the 80 per cent enjoyed over the same period by regional rival Singapore Airlines.

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But a rollback of coronavirus travel restrictions both in Hong Kong and across the border has helped the airline to reach 40 per cent of its pre-pandemic capacity in January. Cathay earlier said it planned to operate 100 return flights to 14 mainland Chinese cities by the end of February.

Both Cathay and its budget carrier HK Express are expected to reach 70 per cent of pre-pandemic passenger capacity by the close of the year, with hopes for a full-service restoration by the end of 2024.

HK Express said it had been hit hard by the now-axed travel restrictions and quarantine requirements, despite the carrier reporting a nearly one-third decline in losses from HK$1.97 billion in 2021 to HK$1.5 billion last year.

The airlines also joined three other carriers in the government’s post-pandemic tourism drive to collectively giveaway at least 500,000 airline tickets, with Cathay in March offering 80,000 free return flights to people in Southeast Asia.

Cathay CEO Ronald Lam Siu-por, who took the reins from Augustus Tang Kin-wing in January, earlier this year said the airline intended to press ahead with repaying the HK$1.19 billion in deferred dividends owed on HK$19.5 billion in preference shares acquired by the city government as part of a financial lifeline extended in 2020.

The move was part of a HK$39 billion recapitalisation package to keep the airline afloat as the coronavirus pandemic crippled worldwide demand for travel.

Since the end of last year, Hong Kong has gradually lifted its stringent anti-epidemic policies such as scrapping a medical surveillance period for arrivals in December and fully restoring cross-border travel with the mainland in February.

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Official figures showed the volume of Hong Kong’s air passenger traffic in January reached 32 per cent of its pre-pandemic level, with the city’s airport handling 2.1 million travellers.

The city also lifted the last of its major restrictions last Wednesday, when it scrapped a sweeping mask mandate after nearly three years.

More from South China Morning Post:

• Cathay Pacific to give away 80,000 return flights from Thailand, Singapore, Philippines, Malaysia, Indonesia, Vietnam and Cambodia as part of ‘Hello Hong Kong’ campaign
• Same same, but different? Singapore Airlines ad gets Cathay Pacific executive all hot and bothered over similarities

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