Cathay Pacific Group narrowed its losses in 2021 compared to 2020 as its "exceptionally strong" cargo business buoyed its overall performance.

The Group reported an attributable loss of HK$5.5 billion (US$703.4 million), lesser than the HK$21.7 billion (US$2.8 billion) it incurred in 2020. The Group said it made an attributable profit of HK$2.01 billion (US$255.8 million) in the second half of 2021 while posting a loss of HK$7.57 billion (US$968.1 million) in the first half of last year.

"In our previous annual report, I wrote that 2020 was the most challenging year in our history. The unprecedented disruption caused by COVID-19 to the global aviation industry and the subsequent travel and operational restrictions around the world has continued to affect our business severely. Notwithstanding these challenges, the situation did improve as 2021 progressed," Patrick Healy, Cathay Pacific chairman said.

"The second half of the year is traditionally stronger than the first half, and this was the case for us in 2021. The exceptional performance of our cargo business, especially during the second-half peak season, was extremely encouraging," Healy added, noting however that Cathay still continued to face serious challenges.

"Despite the considerable improvement in results in the second half of the year, our overall loss for the full year was still substantial," the Cathay chief added.

Cargo performance

The Cathay Group reported that cargo revenue for 2021 hit HK$32.3 billion (US$4.13 billion) an increase of 31.8% compared to 2020 as cargo revenue tonne-kilometers (RFTK) decreased by 1.1%.

Capacity, measured by available cargo tonne-kilometers (AFTK), decreased by 10.9%. Load factor increased by 8.1 percentage points to 81.4%.

The decline in volumes comes as the operations of Cathay's passenger business remained scant resulting in reduced bellyhold capacity. The Group noted that as operational and travel restrictions remained in place throughout 2021, "this heavily constrained our ability to operate more flights" — and ended the year operating a considerably smaller amount of our pre-COVID-19 passenger capacity than we had planned.

"Our cargo business performed exceptionally well," the Cathay statement said. "Cargo demand grew ahead of the traditional peak season in the second half of the year."

It added that in the months leading up to the end of 2021, the carrier operated its freighter fleet at "peak capacity," and supplemented our cargo capacity with additional cargo-only passenger flight operations.

"We also operated six of our Boeing 777-300ER passenger aircraft that have been partially converted into 'preighters' by removing some of the seats in the passenger cabins to provide additional cargo-carrying capacity," it added.

"In October, we carried more than 136,000 tonnes of cargo – the most we have carried in a single month since the start of COVID-19."

Prospects in 2022

Cathay noted an "extremely challenging start to 2022" following the emergence of the Omicron variant, and Hong Kong's move to tighten the quarantine requirements for Hong Kong-based aircrew – notably those operating cargo flights.

Hong Kong also temporarily banned all flights from nine countries, including the UK and the US, which Cathay said are "major markets" for the carrier and passengers from high-risk places were banned from transiting through Hong Kong International Airport.

"All this constrained our ability to operate flights as planned," Cathay added. "As a result, we expect to operate around 2% of pre-COVID-19 passenger flight capacity, and our cargo flight capacity is likely to remain less than one-third of pre-COVID-19 levels while current restrictions remain in place."

"We are trying our best to maintain our passenger and cargo networks as far as possible and will try to increase our cargo capacity as much as practicable," the carrier said.