Cathay Pacific to post loss of $780m for 2021

Cathay Pacific Group (HKG: 0293) has revealed it expects to post a net loss for 2021 of HK$5.6 – 6.1 billion (US$780m).

While this is significant loss for any company to be hit with, it is an improvement on the HK$21.6 billion loss the airline recorded in 2020.

The improvement was primarily driven by strong cargo demand, high cargo yield and load factors, and cash and cost management initiatives. The full-year 2020 result also included the recognition of one-off items such as impairment charges and restructuring, which were significantly reduced in 2021.

“Passenger travel remained extremely subdued throughout 2021, as a result of ongoing travel restrictions and strict quarantine requirements.  We flew 717,059 passengers during 2021, getting people home, reuniting many of them with family, and helping students travel to and from school or university overseas.  This compares to the 4.6 million passengers that we flew in 2020 and 35.2 million passengers that we flew in 2019,” said Cathay Pacific’s Chief Executive Officer Augustus Tang.

“While passenger travel continued to be acutely affected, cargo demand was strong throughout the year.  We carried approximately 1.3 million tonnes of cargo in 2021, which compares to around 1.3 million tonnes in 2020 and 2 million tonnes in 2019.  Throughout 2021, we deployed all available capacity to meet the consistently high demand, achieving strong yield and high load factors and transporting a wide range of goods including daily necessities, fresh produce, electrical items and pharmaceutical products. 

“Despite quarantine restrictions and operational challenges, Cathay Pacific surpassed the milestone of 120 million COVID-19 vaccines carried in 2021. We carried more than 13.3 million doses in a single day. As a group, our airlines have carried more than 165 million doses of different COVID-19 vaccines around the world since the pandemic began.

“Having worked hard to tackle the challenges presented by the COVID-19 pandemic, taken decisive actions to create a more focused, efficient and competitive business and responded to strong cargo demand, we have reduced operating cash burn from the HK$2.5-3.0 billion range in the first half of 2020 down to marginally cash generative in the second half of 2021.”

Cathay Pacific passenger numbers improve in December

Hong Kong’s flagship airline carried a total of 92,219 passengers in December 2021, an increase of 130.6% compared to December 2020.

However this number is still around 97% down on December 2019, when COVID-19 hadn’t yet caused significant disruptions.

The airline’s cargo business carried 134,691 tonnes of merchandise during December, an increase of 12% compared to December 2020, but a 24.1% decrease compared with the same period in 2019.

Is Cathay Pacific stock a buy in 2022?

Since December 2019, Cathay Pacific’s stock price is down around 34% and in recent months the airline has been impacted by the Hong Kong Government’s tightening of aircrew quarantine requirements and travel restrictions. 

However, the stock could be on the radar for investors looking for a deep value recovery play with confidence in Asian travel stocks increasing as the world continues to overcome the Omicron COVID-19 variant.