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© Ryan Fletcher

Cargo accounted for nearly 60% of Cathay Pacific’s revenues last year, up from 22% a year earlier, as the Hong Kong carrier announced a loss of HK$21.6bn (US$2.7bn).

Group revenue fell by more than half as capacity plummeted 79% and passenger numbers 87%. The group is spending some HK$2.4bn on restructuring, which has cut the monthly cash burn by about HK$500m a month.

Cargo was, of course, the star performer – but the February introduction of quarantine rules for crew in Hong Kong dampened even that business.

“The new measures have resulted in a reduction to our passenger capacity of about 60%, a reduction to our cargo capacity of about 25% compared with January and an increase in cash burn of approximately HK$300-400m a month over the previous HK$1.0-1.5bn range,” said group chair Patrick Healy.

Last year saw cargo revenue rise 16% over 2019, to HK$24.5bn, despite capacity down more than 35%, load factors increased by 8.9 percentage points compared with 2019, to 73.3%, and yields were up by 58.3%.

“This [revenue rise] was a reflection not only of the imbalance in the market between demand and available capacity, but also of the extraordinary work of our people to secure revenue wherever possible in incredibly dynamic market conditions,” said Mr Healy.

“We took numerous steps to add capacity, including operating 5,648 cargo-only passenger flights, chartering 680 freighter flights from our all-cargo subsidiary, Air Hong Kong, as well as loading cargo in the cabins of some passenger aircraft. We also converted four of our [777-300ER] passenger aircraft to allow for more cargo capacity by removing seats.”

He added that the airline used this capacity to support its contract with Hong Kong Post.

Cathay Pacific has 51 777-300ERs, acknowledged to be among the best aircraft for cargo-only flights. Lufthansa, by contrast, which last week reported almost identical cargo revenues to Cathay despite having seven fewer freighters, told media it was also unable to offer as many ‘preighter’ flights because it doesn’t operate 777-300ERs.

“A330s are the next best,” explained LH Cargo CEO Dorothea von Boxberg, “but that aircraft is also in demand by the passenger side – so who gets the resources? It’s a passenger aircraft, so it goes to the passenger business.”

Cathay said it currently had about 45% of its fleet – 82 aircraft – parked outside Hong Kong and has deferred aircraft deliveries. It anticipates that 34 of those aircraft were “unlikely to re-enter meaningful economic service again before they retire or are returned to lessors”.

You can read Cathay Pacific’s full results here.

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