Cathay seeks to boost cargo capacity amid pain from new quarantine rules

Cathay Pacific returned to profit in the second half of last year but has since been hamstrung by tough new quarantine rules for crew and said it is trying to boost cargo capacity as much as possible in an effort to cope. Hong Kong's flagship airline managed a profit of about HK$2b in the second half, thanks to cost cuts and strong cargo demand and pricing, even though it flew 85% fewer passengers than in 2020, when it was also affected by the coronavirus pandemic. That helped it book a slightly smaller-than-expected annual loss of HK$5.5b ($700m) - also a big improvement from a loss of HK$21.65b the prior year. Chairman Patrick Healy said, however, that the airline has had an "extremely challenging" start to 2022 after Hong Kong tightened crew quarantine requirements and banned passenger flights from major markets like the United States, Britain and Australia to contain COVID-19 cases. "Exactly when current restrictions might change, we have no way of knowing," he told reporters. The airline has forecast it will burn through HK$1b to HK$1.5b of cash a month starting in February due to the new rules. Since January, the airline has been operating just 2% of its pre-pandemic passenger capacity and less than a third of its pre-pandemic cargo capacity due to those constraints. But the airline, which relied on cargo for 79% of its revenue last year, could benefit from rising freight prices as a result of disruptions to the Europe-Asia market as European and Japanese carriers avoid Russian airspace. Air freight rates between China and northern Europe have jumped 34% since Russia's invasion of Ukraine, according to the Freightos Air Index.<br/>