Cathay Pacific aircraft line up on the tarmac at the Hong Kong International Airport on April 30 as airlines across the globe have cancelled flights and postponed or adjusted services in response to the COVID-19 pandemic. Photo: AFP

The Cathay Pacific Group reported an unprecedented business loss of more than HK$21 billion in 2020, experiencing most challenging year in its more than 70-year history, and the group said it is by no means clear how the pandemic and its impact will evolve in the coming months.

The Cathay Pacific Group's attributable loss was HK$21.65 billion ($25.8 billion) in 2020, compared with a business profit of HK$1.69 billion in 2019, the group said on Wednesday. 

The group said their passenger revenues in 2020 declined to only 2-3 percent of 2019 levels since the onset of the pandemic. With flight demand at an all-time low, the group drastically reduced passenger schedule with operating capacity below 10 percent for much of 2020. 

The 2020 summer season, usually the peak flight time of a year, was difficult, although there were some occasional pockets of demand, notably in the summer season with student travel from Hong Kong and the Chinese mainland flying to the UK and other destinations in Europe. 

Passenger revenue in 2020 was HK$11.3 billion, a decrease of 84.3 percent compared to 2019. Revenue passenger kilometer (RPK) traffic decreased by 85.1 percent, while available seat kilometer (ASK) capacity decreased by 78.8 percent.

In terms or cargo business, it was by far the better performer, though it too was affected by the substantial contraction in capacity usually provided by the bellies of passenger aircraft. 

The group said its cargo revenue in 2020 was HK$24.57 billion, an increase of 16.2 percent compared to 2019, reflecting the imbalance in the market.

COVID-19 and the resultant travel restrictions and quarantine requirements put in place around the world, brought about an unprecedented disruption of the global air travel market, and the repercussions have been huge. The International Air Transport Association estimates that global passenger traffic will not return to pre-COVID-19 levels until 2024.

The group said its market conditions remain challenging and fluid. It is by no means clear how the pandemic and its impact will evolve in the coming months.

From February 20th 2021, the Hong Kong SAR government has implemented stricter quarantine requirements for Hong Kong-based pilots and cabin crew. The new measures have resulted in a reduction to the passenger capacity of about 60 percent and a reduction to cargo capacity of about 25 percent. 

The company stated at the end of last year that they expected to operate at well below a quarter of pre-pandemic passenger flight capacity in the first half of 2021 with improvement in the second half of the year. This assumed that vaccines would prove to be effective and would be widely adopted in major markets by summer 2021. Consequently, the group expected to operate at well below 50 percent passenger capacity throughout 2021.

The group said their short-term business outlook continues to be challenging. However, they remain absolutely confident in the long-term market future and competitive position of the airline.