SIMIC

Cathay Pacific group chief customer and commercial officer, Ronald Lam, noted that the airline had been taking decisive actions to reduce costs. "But despite these efforts we are burning cash at a rate of HKD1.5 billion to HKD2 billion per month, and will continue to experience significant cash burn until the market recovers."

The International Air Transport Association (IATA) has pushed back its forecast for passenger recovery by a year to 2024, demonstrating just how slow a return to pre-pandemic levels will be.

"We are weathering the storm for now, but the fact remains that we simply will not survive unless we adapt our airlines for the new travel market," he said.

"A restructuring will therefore be inevitable to protect the company, the Hong Kong aviation hub, and the livelihoods of as many people as possible. We continue to move forward with our comprehensive review of all aspects of the business, and will make our recommendations to the board in the fourth quarter on the size and shape of the company to allow us to survive and thrive in this new environment."

Looking ahead, Mr Lam noted that the group was cautiously optimistic of a reasonably promising cargo peak season, having received strong pre-orders that will serve the capacity needs of our customers.

"Beyond the traditional peak season, however, prospects are very unclear. Regional geopolitical tensions and the ongoing China-US trade dispute could have a significant adverse effect on airfreight demand, and the situation has the potential to deteriorate rapidly."

On the passenger demand front, Mr Lam said, "We still haven't seen solid signs of immediate improvement. We have therefore revised our operating passenger flight capacity down to about 10 per cent in September and similar levels in October, subject to the further relaxation or tightening of travel restrictions and quarantine requirements."

Mr Lam said he welcomed the move by the HKSAR Government to engage in discussions with 11 countries on the establishment of travel bubbles. "We look forward to further relaxation measures in future that will help revitalise travel activities and ensure the continued strength and importance of Hong Kong as a global aviation hub.

"Given that we will be operating just a fraction of our services in the foreseeable future, we will continue to transfer some of our passenger fleet - approximately 40 per cent - to locations outside of Hong Kong in keeping with prudent operational and asset management considerations."