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(Reuters) -Hong Kong’s Cathay Pacific Airways (OTC:CPCAY) Ltd said on Wednesday its first-half loss shrank by nearly a quarter, helped by a drastic reduction in headcount and strong air cargo demand.
But Cathay, which lacks a domestic market, remains badly hit by pandemic-related border closures, with passenger revenue plunging 93% during the first six months of the year.
“COVID-19 continued to pose significant challenges for the Cathay Group in the first half of 2021 and this continues to be the toughest period in our history,” Chairman Patrick Healy said in a statement.
It posted a net loss of HK$7.57 billion ($973 million), in line with the company’s guidance that it would be somewhat smaller than the prior year.
That included HK$500 million of impairment charges mainly related to 11 grounded planes which are unlikely to return to service as well as HK$403 million of restructuring costs.
In one bright spot for the airline, Healy said demand for air cargo, which saw yields surge 24% and accounted for 80% of all revenue, was expected to continue to be robust.
Shares in Cathay were up 1.9% after the news.
Cathay expects to reduce its monthly cash burn in the second half as rules are eased for vaccinated crew and passenger capacity rises to as much as 30% of pre-COVID levels in the fourth quarter.
It is likely to report a HK$9.85 billion full-year loss, according to the average of 14 estimates compiled by Refinitiv, which would represent a much-improved second half.
The airline last year cut costs with the loss of 5,900 jobs and also ended its regional Cathay Dragon brand. It has since shifted remaining pilots and cabin crew to lower-paid contracts and closed overseas pilot and flight attendant bases, resulting in additional job losses.
Remaining pilots and cabin crew based in Hong Kong have been told they must be vaccinated by Aug. 31 or risk losing their jobs. The airline said last month that 94% of pilots and 76% of cabin crew had booked or received vaccinations.
($1 = 7.7824 Hong Kong dollars)
