Cathay Pacific cargo faces flat demand but belly bolsters business

Cathay Pacific reported underwhelming cargo figures for December 2022 as a result of overall “flat market demand”, but increased passenger flights are providing a boost for belly capacity.

The airline said it carried 106,471 tonnes of cargo last month, a decrease of 21% compared with December 2021, and a 40% decrease compared with the same period in 2019.

The month’s cargo revenue tonne kilometres (RFTKs) decreased 22.6% year-on-year, and were down 34% compared with December 2019.

The cargo load factor decreased by 16.9 percentage points to 67.3%, while capacity, measured in available cargo tonne kilometres (AFTKs), decreased by 3.2% year-on-year, and was down by 35% versus December 2019.

Overall in 2022, the tonnage decreased by 13.4% against a 19% decrease in capacity and a 29.8% decrease in RFTKs, compared with 2021.

Cathay Pacific chief executive Ronald Lam said: “In terms of cargo, overall market demand continued to be flat in December, as was the case for the fourth quarter. Tonnage saw a mild month-on-month increase of 3% against a 4% increase in cargo flight capacity.

“Overall in December, we operated 65% of pre-pandemic cargo flight capacity levels.”

Pandemic containment measures in China continued to impact Cathay Pacific’s cargo volumes at the end of 2022, although European network expansion softened the blow.

There was positive news for the passenger business earlier this year when Cathay Pacific announced it would more than double its flights to the Chinese mainland and increase its belly capacity as China has eased pandemic restrictions.

Cathay Pacific carried a total of 801,088 passengers last month, an increase of 768.7% compared with December 2021, but a 73.3% decrease compared with the pre-pandemic level in December 2019. 

Lam pointed out that though passenger flights are increasing following the lifting of travel restrictions in Hong Kong and subsequent Christmas travel demand, the airline was “still only operating about 32% of pre-pandemic passenger flight capacity levels” in December.

Overall for 2022, Cathay said: “The second-half 2022 results for the Group’s airlines and subsidiaries were a marked improvement over the first-half 2022 results, although still a small loss overall for the full year of 2022.”

Lam said air cargo is due to face continuing challenges into February.

“Concerning cargo, the easing of restrictions for cross-border trucking between Hong Kong and the Chinese Mainland is welcome news. On the other hand, with Covid-19 still impacting various parts of the country, coupled with Chinese New Year occurring in January, the air cargo market will continue to experience challenges until mid-February.

“We will remain agile in our response to these new challenges.”

The passenger business outlook is positive. Lam added: “As a Group, which includes passenger airlines Cathay Pacific and HK Express, we anticipate we will be operating about 70% of pre-pandemic passenger flight capacity by the end of 2023 with the aim of returning to pre-pandemic levels by the end of 2024.”

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