Cathay Pacific said its air cargo volumes remained flat in May as demand continued to be subdued, although e-commerce and its special solution segments were bright spots in its performance for the month.

The Hong Kong-headquartered airline carried 109,834 tonnes of cargo last month, an increase of 18.8% compared with May 2022, when the airline's cargo capacity was "significantly reduced" due to stricter aircrew quarantine measures implemented by governments to stem the spread of new Covid-19 variants.

In April, Cathay recorded 109,372 tonnes of cargo, an increase of 18.4% year-on-year. Although cargo volumes in May were slightly higher than April's, this is lower than the 121,776 tonnes of cargo recorded in March.

"Turning to our cargo business, market volume remained largely flat in May," said Lavinia Lau, Cathay's chief customer and commercial officer.

"High-tech demand and new consumer product shipments continued to underperform due to elevated inventory levels. However, the e-commerce market remained relatively active and in the special solution segment, aircraft engine volumes improved as passenger services resumed," Lau added.

For May, cargo revenue tonne kilometres (RFTKs) increased 73.4% year on year. The cargo load factor decreased by 14.2 percentage points to 61.5%, while capacity, measured in available cargo tonne kilometres (AFTKs), increased by 113.6% year on year.

Cathay said in the first five months of 2023, the tonnage increased by 28.2% against a 154.6% increase in capacity and a 107.2% increase in RFTKs, as compared with the same period for 2022.

Significant demand pick-up by the end of Q3

Looking ahead, Cathay's chief customer and commercial officer said any significant growth in air cargo volumes is not expected until the end of the third quarter when the traditional peak season usually begins.

"In terms of cargo, the summer months are traditionally slower, and any significant pick-up in demand is not expected until the end of the third quarter," Lau said. "We also anticipate more intense competition as overall cargo demand lags behind supply."

The Cathay executive noted that as the airline rebuilds its capacity through the expansion of the widebody passenger network, it will "continue to source new demand and optimise our freighter schedules accordingly."

"Toronto and Miami will receive additional freighter capacity as a result," Lau added.

Meanwhile,  the Cathay Group has seen a strong rebound in the performance of its airlines.

In its performance announcement for May, Cathay noted that its cash flow has continued to improve, further to being overall operating cash generative in 2022.

It said that the Group had been operating cash generative so far in 2023.

"In addition, as mentioned in our 2022 Annual Report, the Group will recognise a one-off non-cash gain, estimated to be approximately HK$1.9 billion, in the first half of 2023 as a result of a deemed disposal of our interest in Air China Limited from 18.13% to 16.26%," Cathay said.

"Taking all of the above into account, together with the offsetting impact of the results from associates, which are reported three months in arrears, we expect that the Group will deliver a consolidated profit for the first half of 2023," the carrier added.