Growing Confidence The Worst Is Over For Cathay Pacific

Cathay Pacific’s passenger numbers are improving but still way down on 2019 levels, however, there are clear signs the airline is turning the corner.

Cathay Pacific

IATA/ICAO Code

CX/CPA

Airline Type

Full Service Carrier

Hub(s)

Hong Kong International Airport

Year Founded

1946

Alliance

oneworld

CEO

Augustus Tang

Country

China (Special Administrative Region)

Cathay Pacific’s June passenger numbers were more than double June 2021’s figure but remain around 95% down on pre-pandemic levels. The Hong Kong-based airline released its latest numbers late last week. While there is still a long way to go, there is a clear sense the tide is turning, and the commentary out of Cathay Pacific is becoming increasingly optimistic.

Cathay Pacific flew 150,077 passengers in June, an increase of 269.2% compared to June 2021 but a 95.2% decrease compared to the pre-pandemic level in June 2019. Load factors and available seat miles show a similar trend – substantially up on comparable 2021 figures but way down on comparable 2019 levels.

Cathay Pacific’s passenger numbers are still 95% down on pre-pandemic levels. Photo: Airbus

The tide is turning at Cathay Pacific

What’s giving the airline its mid-2022 boost? Cathay Pacific attributes June’s improved stats to the beneficial impact of further adjustments to the Hong Kong SAR Government’s travel restrictions and quarantine requirements, notably the circuit-breaker mechanism, effective from 1 June.

The circuit-breaker mechanism refers to a rule whereby the Hong Kong SAR Government bans an airline from flying on a route into Hong Kong if that airline inadvertently brings in five or more infected passengers on a single flight. That ban was two weeks but was recently trimmed to five days. Last week, in news to make the most battle-hardened airline executive cheer, Hong Kong’s new Chief Executive, John Lee, suspended the circuit breaker mechanism altogether. Thursday’s suspension followed widespread chaos following over 100 flight bans this year alone.

“We continued to see positive developments in June following further adjustments to travel restrictions in Hong Kong,” said Cathay Pacific Chief Customer and Commercial Officer Ronald Lam. “As sentiment for travel continued to improve, we resumed more flights to more destinations and deployed additional passenger flight capacity – about 170% more than we did in May – to meet the demand. However, we still only operated about 11% of our pre-pandemic capacity. Load factor increased to 67% and we carried on average more than 5,000 passengers per day.

There is a clear sense coming out of Cathay Pacific that the worst is over for the airline. Photo: Airbus

Cathay Pacific eyes 25% of pre-pandemic capacity by the end of the year

Cathay Pacific is optimistic that the Hong Kong SAR Government will make further changes to Hong Kong’s travel rules, including reducing the number of days travelers have to spend in hotel quarantine. The airline expects passenger demand to continue to climb and is eyeing 25% of its pre-pandemic flight capacity by the end of 2022. However, Cathay Pacific warns that the pandemic situation remains highly dynamic and that they will need to remain agile regarding managing flight capacity.

But perhaps the best indicator of Cathay Pacific’s reviving fortunes can be found on the stock markets. Cathay Pacific shares are up 34% this year on the Hong Kong Stock Exchange. Bloomberg notes the airline’s shares rose 6% in one day last week after news of the circuit-breaker mechanism suspension broke. These rises are perhaps the best indicator yet that Cathay Pacific is starting to turn the corner.