Cathay Pacific expects to lower its cash burn in the second half of 2021 to less than HK$1 billion (US$129 million) a month – down from HK$2.5-3 billion during the peak of the COVID crisis.
“There has been no significant change in the last few months in the dramatic impact COVID-19 has had on passengers to Hong Kong,” chief financial officer Rebecca Sharpe said in an invitation-only briefing. “We currently do have a very healthy liquidity balance.
“Our costs continue to be tightly controlled. Discretionary spend remains on hold.”
The company’s monthly cash burn consists of aircraft loan and lease repayments, cash support provided to subsidiaries, and fuel hedging settlements, according to a briefing.
Cathay Pacific has been operating at just 8 per cent of its pre-pandemic passenger capacity due to heightened COVID-19 restrictions in Hong Kong.
Chief customer and commercial officer Ronald Lam said in a recent Q&A session, “In the coming two months, we plan to ramp up our capacity, especially in August.
“We expect our capacity will go up about 10 per cent, and hopefully get closer to 20 per cent. Beyond August, I think, at the moment, it still quite fluid.”
The briefing said the company hopes the fourth quarter will see passenger capacity jump to 30 per cent.
Lam indicated Cathay is speaking with mainland China to open more flights and to eventually open a Hong Kong and Singapore travel bubble, which has already been postponed twice.
Last week, the airline ordered all pilots and flight attendants to be vaccinated by 31 August. Originally, vaccinations remained highly recommended, but now the company has mandated it across staff, at the risk of losing employment.
So far, 90 per cent of pilots and 65 per cent of cabin crew have been vaccinated, with more booked in for their appointments.
In 2020, the Hong Kong airline lost HK$21.6 billion in revenue, and the company anticipates “a very substantial loss but lower than losses in each of the halves of 2020”, according to the briefing.
The analyst briefing outlines the restructuring of the company, in order to ensure “liquidity and cost management” is the core of its response to the evolving sphere of aviation during the pandemic.
Cathay Airlines announced earlier this month they were closing their Australian base, following the close of its Canadian pilot base and regional offshoot Cathay Dragon, cutting 5,900 jobs since the beginning of the pandemic.