How Singapore Airlines left regional rival Cathay Pacific behind

Just as Singapore Airlines was giving staff an eight-month pay bonus following record profits, Hong Kong was giving away more than 4,400 free tickets to regional rival Cathay Pacific as the city sought to encourage visitors to return. Was.

Singapore Airlines shares rose to their highest level in more than three years after the national carrier illustrated the strength of its post-pandemic recovery with an annual profit of S$2.16bn ($1.6bn) for the year ending March. went.

In contrast, Hong Kong-listed Cathay Pacific shares have declined nearly 40 per cent from their April 2019 high. In March, the airline disclosed a loss of HK$6.5bn ($830mn) for 2022 and shares have remained flat since then.

Their financial divergence mirrors the rise of Singapore, one of the first countries in Asia to reopen its borders after the pandemic, and the incineration of its status as a business hub. Hong Kong, on the other hand, remained largely closed to travel until late last year, losing its position as the region’s busiest airport in 2022 to Singapore. Its slow reopening has affected Cathay Pacific, which is also grappling with labor shortages.

“Singapore was ahead of everyone in the Asia-Pacific (with reopening) last year,” said Brendan Sobie, an independent aviation analyst based in Singapore. “He benefited tremendously from it.

“I don’t think Cathay’s first fiscal year after reopening will be like Singapore,” he said. “That honeymoon period is being cut short because of the supply and demand imbalance – they’ve largely missed out on those market conditions.”

Hong Kong tourism is still very early in its recovery, which is reflected in carrier numbers. Singapore Airlines has reached about 80 percent of pre-pandemic passenger capacity, while Cathay Pacific is still at less than 50 percent.

Singapore Airlines and its wholly-owned budget airline Scoot carried 2.7 million passengers in April, a year-on-year increase of 85 percent and fewer than 3.1 million passengers carried in the same month in 2019. Cathay Pacific carried 1.4 million passengers in April. 2023, about 44 percent of the number in April 2019.

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At its annual meeting this month, Cathay chief executive Ronald Lamm said the airline was unlikely to exceed 70 per cent of pre-Covid passenger capacity before the end of this year, citing labor constraints.

The Hong Kong Aircrew Officers’ Association said an average of 10 to 15 senior pilots left Cathay Pacific every month this year, up from about 30 to 50 every month in the second half of last year.

The airline – which had a workforce of 3,800 pilots at the end of 2019 – lost more than 1,800 pilots in the past three years, according to union president Paul Weatherilt, but has only recruited about 400 new pilots. The union said pilots are disgruntled after seeing pay cuts of up to 40 per cent in 2020.

Cathay Pacific said “attrition rates have normalized across all employee groups”, including pilots, adding that crew pay has increased by 3.3 percent since the beginning of the year.

“Apart from Hong Kong having a later reopening timeline than other aviation hubs, Cathay’s slow recovery pace reflects the ongoing challenges with supply constraints across the aviation ecosystem. , , (such as) availability of certified manpower,” JP Morgan analyst Karen Lee wrote in a note in March.

With wages now calculated by flight time, Hong Kong aviation authorities have advised Cathay that some of their pilots are taxiing to runways at “significantly slow speeds”, according to an internal Cathay memo seen by the Financial Times .

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In another sign of trouble, Cathay fired three cabin crew after a clip went viral accusing them of mocking a Mandarin Chinese-speaking customer’s English language ability. Chief Executive Lam said this had “significantly damaged the image of Hong Kong and Cathay”. But Cathay’s flight attendants union hit back, complaining of low morale, overburdened work and low pay.

Singapore Airlines, on the other hand, told local media that it had brought back most of its more than 3,000 pilots by the middle of last year – many of whom were furloughed. Only a “very small number” had survived during the pandemic, management said at the time.

Singapore Airlines historically does not provide many details about its employees, citing commercial reasons. The company did not respond to a request for comment.

Since the pandemic, Singapore has received more transit traffic that traditionally passed through Hong Kong.

“Singapore Airlines did well last year because they served as the only realistic transit hub across Asia,” said a senior Asian airline executive. Cathay has forecast a 68 per cent drop in sales from the US in 2022 to $572 million compared to 2019. , as compared to the 12 months to the end of March 2020.

The bullish market position that has been boosting Singapore Airlines’ profits is not expected to last long. And Hong Kong is spending billions of dollars to attract back international business and tourists, such as most recently with its Cathay campaign.

“We are still in a dynamic period, and many of us believe that most of the gains are temporary,” said a Singapore Airlines executive. “I’m not sure we’ll see an advantage like that again. It’s too early to call a winner.

Just as Singapore Airlines was giving staff an eight-month pay bonus following record profits, Hong Kong was giving away more than 4,400 free tickets to regional rival Cathay Pacific as the city sought to encourage visitors to return. Was.

Singapore Airlines shares rose to their highest level in more than three years after the national carrier illustrated the strength of its post-pandemic recovery with an annual profit of S$2.16bn ($1.6bn) for the year ending March. went.

In contrast, Hong Kong-listed Cathay Pacific shares have declined nearly 40 per cent from their April 2019 high. In March, the airline disclosed a loss of HK$6.5bn ($830mn) for 2022 and shares have remained flat since then.

Their financial divergence mirrors the rise of Singapore, one of the first countries in Asia to reopen its borders after the pandemic, and the incineration of its status as a business hub. Hong Kong, on the other hand, remained largely closed to travel until late last year, losing its position as the region’s busiest airport in 2022 to Singapore. Its slow reopening has affected Cathay Pacific, which is also grappling with labor shortages.

“Singapore was ahead of everyone in the Asia-Pacific (with reopening) last year,” said Brendan Sobie, an independent aviation analyst based in Singapore. “He benefited tremendously from it.

“I don’t think Cathay’s first fiscal year after reopening will be like Singapore,” he said. “That honeymoon period is being cut short because of the supply and demand imbalance – they’ve largely missed out on those market conditions.”

Hong Kong tourism is still very early in its recovery, which is reflected in carrier numbers. Singapore Airlines has reached about 80 percent of pre-pandemic passenger capacity, while Cathay Pacific is still at less than 50 percent.

Singapore Airlines and its wholly-owned budget airline Scoot carried 2.7 million passengers in April, a year-on-year increase of 85 percent and fewer than 3.1 million passengers carried in the same month in 2019. Cathay Pacific carried 1.4 million passengers in April. 2023, about 44 percent of the number in April 2019.

You are viewing a snapshot of an interactive graphic. This is probably due to being offline or JavaScript is disabled in your browser.

At its annual meeting this month, Cathay chief executive Ronald Lamm said the airline was unlikely to exceed 70 per cent of pre-Covid passenger capacity before the end of this year, citing labor constraints.

The Hong Kong Aircrew Officers’ Association said an average of 10 to 15 senior pilots left Cathay Pacific every month this year, up from about 30 to 50 every month in the second half of last year.

The airline – which had a workforce of 3,800 pilots at the end of 2019 – lost more than 1,800 pilots in the past three years, according to union president Paul Weatherilt, but has only recruited about 400 new pilots. The union said pilots are disgruntled after seeing pay cuts of up to 40 per cent in 2020.

Cathay Pacific said “attrition rates have normalized across all employee groups”, including pilots, adding that crew pay has increased by 3.3 percent since the beginning of the year.

“Apart from Hong Kong having a later reopening timeline than other aviation hubs, Cathay’s slow recovery pace reflects the ongoing challenges with supply constraints across the aviation ecosystem. , , (such as) availability of certified manpower,” JP Morgan analyst Karen Lee wrote in a note in March.

With wages now calculated by flight time, Hong Kong aviation authorities have advised Cathay that some of their pilots are taxiing to runways at “significantly slow speeds”, according to an internal Cathay memo seen by the Financial Times .

You are viewing a snapshot of an interactive graphic. This is probably due to being offline or JavaScript is disabled in your browser.

In another sign of trouble, Cathay fired three cabin crew after a clip went viral accusing them of mocking a Mandarin Chinese-speaking customer’s English language ability. Chief Executive Lam said this had “significantly damaged the image of Hong Kong and Cathay”. But Cathay’s flight attendants union hit back, complaining of low morale, overburdened work and low pay.

Singapore Airlines, on the other hand, told local media that it had brought back most of its more than 3,000 pilots by the middle of last year – many of whom were furloughed. Only a “very small number” had survived during the pandemic, management said at the time.

Singapore Airlines historically does not provide many details about its employees, citing commercial reasons. The company did not respond to a request for comment.

Since the pandemic, Singapore has received more transit traffic that traditionally passed through Hong Kong.

“Singapore Airlines did well last year because they served as the only realistic transit hub across Asia,” said a senior Asian airline executive. Cathay has forecast a 68 per cent drop in sales from the US in 2022 to $572 million compared to 2019. , as compared to the 12 months to the end of March 2020.

The bullish market position that has been boosting Singapore Airlines’ profits is not expected to last long. And Hong Kong is spending billions of dollars to attract back international business and tourists, such as most recently with its Cathay campaign.

“We are still in a dynamic period, and many of us believe that most of the gains are temporary,” said a Singapore Airlines executive. “I’m not sure we’ll see an advantage like that again. It’s too early to call a winner.