A recent outbreak traced to Cathay air crew who breached home quarantine has sparked a dramatic tightening of already strict social distancing controls and travel restrictions, causing renewed anger among residents and businesses.

On Tuesday, Lam said authorities were investigating "whether this airline has complied with the regulations".

"We will take the legal action once we have the full evidence of what wrong it has gone into," Lam said in English.

The revelation piles new pressure on Cathay Pacific, which has been decimated by the pandemic and has no domestic market to fall back on in a city that used to be a major Asian transport and logistics hub.

Cargo flights, the one area where the airline made some cash, have been slashed recently because new quarantine rules imposed on crew has left managers struggling to find enough pilots.

Last month AFP reported that Cathay pilots were leaving in droves.

Lam's government is facing growing anger over there being no end in sight to zero-Covid controls at a time when rival business hubs are learning to live with the virus.

Her administration has hewed to China's approach and says restarting travel with the mainland must come before the rest of the world.

But the mainland is battling its own outbreak and appears to be in no rush to open to Hong Kong, leaving the city facing a double isolation.

Lam's government has also failed to persuade enough people to get vaccinated during the zero-Covid controls, especially the elderly, with just 62 percent of the population inoculated despite ample supplies.

That makes Hong Kong the third least vaccinated place in a list of the International Monetary Fund’s 39 advanced economies, above only Latvia and Slovakia.

Among the over 80s -- the demographic most at risk from severe Covid-19 illness -- only 23 percent have taken a first vaccine dose.

In a statement on Tuesday night, Cathay Pacific said it has been proudly serving Hong Kong for more than 75 years.

“While the last two years have created the most challenging period imaginable for any airline, throughout this period we have done everything in our power to keep Hong Kong safely connected with the world. Cathay Pacific aircrew have shown tremendous courage, resilience and professionalism as they have worked selflessly in extraordinarily demanding conditions,” it said.

The airline said it has complied with the Hong Kong government’s health protection measures and regulations in order to keep as many flights as possible operating while protecting the health of citizens.

From July to December last year, it was common practice for cabin crew to travel outbound as aircrew on passenger flights, lay over at their destination in strict isolation and return to Hong Kong on a cargo-only passenger aircraft. The arrangement is in compliance with the relevant regulations, the airline said.

Following the emergence of the Omicron variant, the regulations were updated on December 29. From this date, all aircrew who lay over in an overseas location complete quarantine at a designated quarantine hotel, whether they arrive on passenger or cargo flights.

“As the pandemic situation evolves, we will continue to review and adjust our operating procedures in close co-ordination with the relevant authorities, ensuring that they are appropriate to maintain a safe environment for our people,” it said.

“More than ever, now is the time to keep working together and we will continue to work in partnership with the government and the people of Hong Kong as we do all we can to keep Hong Kong safely connected with the world.”