HONG KONG, 25 January 2022: Cathay Pacific continues to face substantial capacity reductions in response to significantly reduced demand as well as travel restrictions and quarantine requirements in Hong Kong amid the ongoing Covid-19 pandemic, according to the airline traffic figures for the year ending 31 December 2021 released on Monday.

Traffic figures for December 2021

Cathay Pacific carried 92,219 passengers in December 2021,
an increase of 130.6% compared to December 2020, but a 96.9% decrease compared
to the pre-pandemic level in December 2019.

The month’s revenue passenger kilometres (RPKs) rose 156.5%
year-on-year but were down 95.1% versus December 2019. Passenger load factor
increased by 18.2 percentage points to 36.6%, while capacity, measured in
available seat kilometres (ASKs), increased by 28.6% but remained 88.6% down on
December 2019 levels. In the full year of 2021, the number of passengers
carried dropped by 84.5% against a 61.8% decrease in capacity and a 79.5%
decrease in RPKs, as compared to 2020.

The airline carried 134,691 tonnes of cargo last month, an
increase of 12% compared to December 2020, but a 24.1% decrease compared with
the same period in 2019. The month’s cargo revenue tonne-kilometres (RFTKs)
rose 11.7% year-on-year but were down 14.7% compared to December 2019. The
cargo load factor increased by four percentage points to 84.3%, while capacity,
measured in available cargo tonne-kilometres (AFTKs), was up by 6.5%
year-on-year but was down 32.9% versus December 2019. In the full year of 2021,
the tonnage increased by 0.1% against a 10.9% drop in capacity and a 1.1%
decrease in RFTKs, as compared to 2020.

2021 full-year performance

Based on a preliminary review of the unaudited consolidated
management accounts of the Cathay Pacific Group for the year ended 31 December
2021 and the information currently available to the Board of Directors of
Cathay Pacific, the Group is expected to record a consolidated loss
attributable to shareholders of approximately HK$5.6-6.1 billion. While the
expected loss is substantial, it compares favourably to the attributable loss
to shareholders of HK$21.6 billion for the year ended 31 December 2020. The
improvement was primarily driven by strong cargo demand, high cargo yield and load
factors, together with a continued focus on effective cash and cost management.
In addition, the full-year 2020 result included the recognition of one-off
items such as impairment charges and restructuring, which were significantly
reduced in 2021.

Chief Executive Officer Augustus Tang said: “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.

“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 is still in the process of finalising the
Group’s annual results for the year ended 31 December 2021, which will be
published in March 2022.

2022 outlook

Tang continued: “In late December and then early
January, the Hong Kong SAR Government further tightened aircrew quarantine
requirements and travel restrictions. These measures will have a significant
impact on our passenger and cargo flight capacity. While we are fully committed
to increasing our cargo capacity when conditions allow and to upholding Hong
Kong’s international aviation hub status, for the month of January 2022, cargo
has reduced to 20% of its pre-pandemic capacity, and passenger flights have
declined to around 2% of their pre-pandemic capacity.

“Regrettably, the capacity reduction will have an
impact on Cathay Pacific’s business, and we have been evaluating the potential
impact of these measures on our operations and cost base. According to our
preliminary assessment, we expect these capacity levels to result in an
operating cash burn of HK$1.0-1.5 billion per month from February.

“Until conditions improve, we are doing everything in
our power to maximise capacity and estimate that mitigation measures to
increase crew resources will enable us to operate approximately an additional
5% more cargo flight capacity than we are currently operating.

“We continue to operate freighter services to the
Chinese Mainland and regional destinations, as well as a daily freighter
operation to North America. The shipment of goods to and from Europe and the
Southwest Pacific is being served by passenger aircraft carrying only cargo.

“On the travel side, we will strive to maintain
passenger connectivity with key destinations, although at reduced frequencies,
under the confines of the place-specific and flight-specific suspension
mechanism. While passenger flights to the Chinese Mainland will remain largely
unaffected, capacity to the rest of the Cathay Pacific network will see a
reduction to ensure continued compliance with the latest Government measures.
We will also leverage the capacity provided by our low-cost subsidiary HK
Express to maintain connectivity with several regional destinations.

“As Hong Kong’s home airline, we remain resolutely committed
to keeping the city safely connected with the world. We are exploring all
options to keep the flow of people and goods moving despite the considerable
challenges we continue to face. We also want to reiterate that the health and
wellbeing of our people, customers and the Hong Kong community remain our top
priority.”

(Source: Cathay Pacific)