Despite continued travel restrictions amid the newest “Omicron” variant, Cathay Pacific has defended its strong financial position. Just days after the irruption of a new variant that threatened the recovery path for many airlines, executives at the flag carrier gave a positive financial update on the carrier, which has been mainly aided by its strong performing cargo division.
According to the airline, it had a strong liquidity position, amounting to HK$31.7 billion (USD$4.07 billion) at the end of October. This figure highlights the extensive restructuring effort the airline has carried since the pandemic began back in 2020. At the time, the Hong Kong-based airline raised HK$39 billion in recapitalization funding in an effort to prevent the collapse of the business. By the middle of last year, Cathay Pacific was burning cash at an alarming rate of HK$3 billion a month.
During a briefing on Wednesday, the Chief Customer and Commercial Officer of Cathay Pacific, Ronald Lam said “It is too early to assess the impact of travel demand.”
Under the current circumstances, Cathay Pacific’s finances are stable, but mostly due to its cargo operations. Since the pandemic began, the demand for air freight has increased significantly with Cathay Pacific adapting to the increase in demand by using a number of passenger aircraft for cargo-only flights.
Despite its weak performance in passenger traffic, the Hong Kong-based company stated it reached its break-even point at the end of June this year. Operating at 10% of its pre-Covid capacity, Cathay is still way behind its competitors largely due to the travel restrictions that have been imposed in Hong Kong.
The Government of Hong Kong doesn’t want any Covid cases to enter the city and has therefore ruled rigidly for the past two years even impeding some scheduled passenger flights from landing in the city this December. Such policies, along with insufficient pilots offering to fly to high-risk destinations (followed by subsequent hotel quarantine) leaves the airline in a precarious position regarding its short-term non-cargo-related operations.