Cathay Pacific reported a net loss of HK$21.65 billion ($2.8 billion) for 2020. The flag carrier of Hong Kong then posted a net loss of HK$7.57 billion ($973 million) for the first half of this year. Heading into 2022, will there be a notable recovery for the airline?
Tough measures
Hong Kong has remained one of the most stringent areas when it comes to travel restrictions. Since the global health crisis, passengers have been subject to tough measures such as lengthy hotel quarantines if they meet the requirements to enter the special administrative region.
As a result of the challenging conditions, Cathay Pacific’s flight activity has dropped, significantly taking its toll on operations. In 2020, the company cut costs by letting go 5,900 members of staff and closing its Cathay Dragon subsidiary. The crew members based in Hong Kong then had to meet vaccination requirements in 2021 to essentially keep working for the firm.
There have been fiascos with crew member requirements across the board. For instance, in November, Cathay let go of three cargo pilots who were infected with the virus during a layover in Frankfurt amid what was deemed a “serious breach” of rules while abroad. Ultimately, Hong Kong authorities ordered a 21-day quarantine of well over 100 Cathay Pacific employees that set foot in the same Frankfurt hotel.
While some were soon released from quarantine, dozens of employees have since quit. These actions continue to add to Cathay’s woes, and heading into the new year, recovery remains a distant milestone.
The struggles continue
During November, the carrier flew only 70,047 passengers. Moreover, this month, strict quarantine measures became even more challenging due to Omicron. Non-residents from over 90 nations have been banned and passengers flying in from the likes of the United States and the United Kingdom are subject to 21 days of quarantine.
Some analysts may note the positive factor that November passenger numbers were at an 85.2% improvement when against November 2020. However, the figures show also show a dark picture that the airline is operating at a 97% lower passenger capacity than in 2019.
With it being over two years since the coronavirus outbreak emerged, the numbers are notably dire. Cathay was one of the first carriers to be impacted by the health crisis due to the regions it primarily serves shutting up shop before the broader aviation industry.
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Subject to external conditions
There had been high hopes regarding the planned reopening of key markers such as Australia. However, the new variant has undoubtedly hindered progress in this field.
While cargo has been a saving grace, with Cathay operating 71% of its pre-pandemic freight capacity, the airline acknowledges that it faces a considerable task on its hands, especially on the passenger side.
Ultimately, even though there had been positive trends this year, activity has still been minimal and any progress patterns have been rocked by the restrictions enforced following Omicron. Hong Kong is likely to react with a no-tolerance approach every time a notable variant emerges. Therefore, Cathay will be holding that there is a more balanced solution in order for it to see sustained long-term recovery.
What are your thoughts about Cathay Pacific’s recovery prospects? How do you feel the airline will perform next year? Let us know what you think of the carrier and its operations in the comment section.
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