Hong Kong's Cathay Pacific Airways said on Monday it was going to resume burning cash because of stricter crew quarantine measures after flagging a surprise profit in the second half of 2021 due to cost cuts and a strong cargo market.
The airline projected HK $5.6 billion to HK $6.1 billion for 2021, which is well below the average HK $10.2 billion estimate from 12 analysts polled by Refinitiv and its HK $21.65 billion loss in 2020.
The full-year forecast was narrower than the first-half loss of HK $7.57 billion, with Cathay pointing to positive cashflow generation in the second half.
The airline forecast it would burn through HK $1 billion to HK $1.5 billion of cash a month starting in February after the government tightened crew quarantine restrictions, forcing the airline to reduce cargo and passenger capacity.
In January, Cathay operated about 2% of its pre-pandemic passenger capacity and about 20% of its pre-pandemic cargo capacity.
Despite the fact that Singapore Airlines Ltd does not have a domestic market, it forecasts it will reach 47% and 45% of pre-COVID passenger capacity in January and February.
Flights to mainland China are less affected.
Until conditions improve, we are doing everything in our power to maximize capacity and estimate that mitigation measures to increase crew resources will allow us to operate approximately an additional 5% more cargo flight capacity than we are currently operating, according to Augustus Tang, Cathay Chief Executive.
Hong Kong, which is pursuing a zero-COVID strategy in hopes of opening its border with mainland China, has suspended transit flights from most of the world.
The Financial Centere introduced tighter crew quarantine rules last month after two Cathay crew members broke self-isolation measures sparked a COVID 19 outbreak in the city.
The two have been arrested, fired and charged over the breaches.