Cathay Slashes Cargo Capacity, Hitting Key Earnings Crutch

(Bloomberg) -- Cathay Pacific Airways Ltd. will operate only about 20% of its pre-pandemic cargo capacity this month, a sharp reduction in what has been a rare bright spot during the most challenging period in the carrier's history. 

While the Hong Kong-based airline will resume some long-haul cargo services from Friday after a weeklong suspension, the January schedule is way thinner than at the end of last year, when freight operations allayed some of the pain of passenger traffic slowing to a relative trickle during the Covid crisis. 

Cathay operated about 71% of pre-pandemic cargo capacity in November, latest available figures show, helped by demand for seasonal goods such as Southern Hemisphere cherries, as well as from shipping products that would normally go by sea. The company described its cargo operations as “consistently robust” that month.

Cathay is scaling back now due to the crippling effect of the government's Covid Zero strategy on its staffing, with most aircrew required to undergo lengthy stretches in quarantine that limit their ability to work. Hong Kong is starting to clamp down even harder as it faces the threat of the omicron coronavirus strain, this week banning inbound flights from eight countries, including the U.S. and U.K., until Jan. 20. 

“We will adopt measures to operate as many cargo services as possible while complying with the latest Covid-19 regulations,” Cathay said in an emailed statement Thursday. 

Passenger traffic was about 12% of typical levels in November and will slide to just 2% this month. The airline said it 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.”  

Cathay shares were down 1.9% as of 3:15 p.m. local time following a 2% loss Wednesday. 

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