Coronavirus: Cathay Pacific chairman admits Hong Kong ‘falling behind’ as rest of world opens up to travel
- Cathay Pacific also says it expects cash burn would fall below HK$500 million ‘for the next few months’ due to recent relaxation of quarantine restrictions
- Airline chairman Patrick Healy says carrier yet to lose coveted airport runway slots overseas, but risk increases if company’s level of activity continues to remain low
Cathay Pacific’s chairman has warned that Hong Kong is “falling behind” as the rest of the world opens up to travel following the decline of the Covid-19 pandemic, but said the recent relaxation of quarantine restrictions would help the airline reduce its cash burn rate.
The airline on Wednesday said it expected its cash burn would fall below HK$500 million (US$64 million) “for the next few months,” down from the HK$1 billion to HK$1.5 billion it has been burning monthly since February.
Earlier in the day, airline chairman Patrick Healy told shareholders at the company’s annual general meeting that while the city’s strictest period of quarantine requirements for Hong Kong flight crew had impacted the airline’s profitability in the first few months of this year, the recent relaxation of anti-epidemic measures from May 1 would allow Cathay to increase its cargo capacity in the coming months.
But he warned that Hong Kong risked losing ground to other aviation hubs which were already opening up to travel.
“As aviation hubs across the world begin to bring back capacity and stage a recovery, Hong Kong is obviously falling behind to a certain extent,” Healy said at the meeting, a recording of which was obtained by the Post.
In April, Cathay operated at about 2 per cent of its pre-pandemic passenger capacity, while its cargo capacity stood at 29 per cent of pre-pandemic levels.
Cathay Pacific carried 40,823 passengers last month, a 98.7 per cent decrease from the pre-pandemic level in April 2019. In the same month, the airline carried 92,361 tonnes of cargo, an increase of 26.3 per cent compared to April last year, but a 43.6 per cent decrease compared with the same period in 2019.
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Last month, Willie Walsh, director general of the International Air Transport Association, said Hong Kong had fallen “off the map” as an aviation hub and it would be difficult for the city to rebuild that reputation.
Referring to Walsh’s comments, the airline chairman said he hoped “in time” to prove him wrong, adding that he wished to see a further relaxation of curbs to enable Cathay to build more capacity in the coming months and stage a “robust recovery”.
Healy said that while the carrier had not lost any coveted runway slots among overseas markets, which allow them to land and take off from airports there, the risk would increase if the current low level of activity continued.
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While much of the world has opened up and resumed quarantine-free international travel, Hong Kong has retained some of the world’s strictest travel rules to align with the “dynamic zero-Covid” approach adopted by mainland China.
City authorities eased several restrictions from May 1, including reducing the period that the flight route suspension mechanism takes effect to five days.
The new measures also increased the threshold for the number of passengers who test positive for Covid-19 on a single flight to five passengers, or 5 per cent of occupants, whichever is greater.
For aircrew, the compulsory quarantine period for passenger flight crews was reduced to three days at a designated hotel. The new measures also require personnel to complete 11 days of medical surveillance.
Cargo crew are also exempt from quarantine, but must undergo 14 days of medical surveillance. Staff are also no longer required to wear an electronic wristband during the latter procedure.
“These changes to quarantine and medical surveillance requirements will allow additional flights and destinations to be reactivated. We have been and will continue to actively resume more flights to more destinations in the coming months,” chief customer and commercial officer Ronald Lam Siu-por said in a statement on Wednesday.
Lam added that the increase would include daily flights to and from London Heathrow from June, with the carrier also resuming or boosting passenger flights for the United States, Australia, New Zealand and India.
In terms of cargo, he said the company would recommence flights to long-haul destinations in Europe and the Americas, and resume freighter services for the United Arab Emirates, Saudi Arabia and Cambodia.
However, Lam said the recent outbreaks of the coronavirus in Shanghai and other parts of mainland China had continued to have an impact on cargo demand.
The annual general meeting was attended by senior Cathay executives, including CEO Augustus Tang Kin-wing, senior directors Ronald Lam, operations chief Greg Hughes and chief financial officer Rebecca Sharpe. Swire Pacific chairman Guy Bradley was also present.
The airline reported losses of HK$5.5 billion (US$703 million) from last year, but an attributable profit of HK$2 billion in the second half of 2021.
