Cathay Pacific CEO Lam Shaobo on profitability and capacity constraints

Cathay Pacific Its chief executive told CNBC the airline hopes to be profitable again in 2023, but returning to pre-pandemic capacity remains one of the airline’s “biggest risks.”

CEO Ronald Lim told CNBC’s Emily Tan on Tuesday that the ability to operate at a profitable level depends on a number of factors, including “how full the flight might be, the revenue we can generate on the flight.”

“But I hope this year we can turn the business around and return to overall profitability.”

Last week, Hong Kong’s flag carrier Annual loss of HK$6.55 billion For the year ending December 2022 ($834.9 million), an increase of 18.5% Losses since 2021.

However, the airline posted an annual operating profit of HK$3.5 billion last year for the first time since 2019, according to Refinitiv data.

“Our current supply is mainly constrained by manpower, not just our company but the entire ecosystem of the aviation industry,” said Lim, who took over as chief executive in January.

“We need people in the air, people on the ground. We also need airport staff ready to take flights in Hong Kong and overseas.”

A panoramic view of Cathay Pacific Airways headquarters is seen in Hong Kong, China, February 27, 2023.

Li Zhihua | China News Service | Getty Images

ICAO Global air passenger demand expected to pick up It reached pre-pandemic levels by the end of March this year and predicted that global air travel demand by the end of the year could be 3% higher than 2019 figures.

The Hong Kong carrier said in its earnings report last week that it can only fully meet pre-pandemic passenger traffic until the end of 2024 due to manpower constraints.

As of December, the group was “operating a third of pre-pandemic passenger flight capacity”, the report said.

“Our forecast is for 70% passenger traffic by the end of the year,” Lam told CNBC.

“It’s mostly going to depend on whether we can integrate all the necessary resources that we need across the system. We’re on track so far…we’re at 50 per cent and we’re working towards finally getting to 70 %This year’s.”

“biggest risk”

However, Lim pointed out that Cathay Pacific’s situation is different from most other airlines.

On the one hand, the Hong Kong crew is subject to “the strictest quarantine conditions in the world,” he said.

Hong Kong only Beginning to lift its strict Covid rules Late last year, much later than the rest of the world.

“So, for a long time, we’ve been operating at very low capacity because of the pandemic. So much so that many of our pilots’ licenses have effectively expired,” he said, adding that airlines had to allocate time and resources to retrain its pilot.

“In terms of our biggest risk, I would say it’s building our capacity, will we get enough resources across the aviation ecosystem,” he said. “We’re going to work very hard to fix this so we can get back to our pre-pandemic capacity as quickly as possible.”

Asked whether the company would pay a dividend to common stockholders this year, he replied: “Not necessarily.”

“It really depends on the performance of the business,” he said, noting that it was too early to draw conclusions because it is only three months into the year.

Cathay received a lifeline from the government in 2020 and is now considering repaying the HK$1.5 billion preference share dividend owed to the government in 2023.

“Our plan is actually to pay all cumulative preferred stock dividends over the course of the year. After that… we can consider paying dividends to our common stockholders.”

Source link

Leave a Comment