Cathay Pacific has put the worst of its financial crisis behind it and now has more cash than ever before to ride out the Covid-19 fallout, as company executives revealed it would burn through the least amount of money since the pandemic began.

Hong Kong’s flagship carrier forecast it would burn less than HK$1 billion (US$128 million) a month from July until the end of this year, the airline told analysts on Friday.

Aggressive cost-cutting, strict spending discipline and an ongoing restructuring including axing more jobs were credited with preserving a healthier cash balance.

“We currently do have a very healthy liquidity balance,” chief financial officer Rebecca Sharpe said. “Our costs continue to be tightly controlled. Discretionary spend remains on hold.”

The airline also revealed it had grown its cash war chest by almost two-thirds since the start of the pandemic to an unaudited HK$32.8 billion at the end of May to weather the travel downturn.

Separately, the airline said new figures showed it burned less than HK$1.5 billion a month on average in the first half of the year. Stricter rules on travel that came into force in February raised its cash burn by up to HK$400 million to as high as HK$1.9 billion per month.

The airline still expects a “very substantial loss” in the first half of 2021, but at an amount somewhat lower than the HK$9.87 billion lost in the first half of last year, and HK$11.78 billion in the second half of 2020. Brisk air freight operations have brought in much-needed revenue.

The airline for the first time in 18 months is preparing to increase flights as travel restrictions and quarantine requirements begin to ease globally and in Hong Kong.

Cathay said two weeks ago it expected to fly 30 per cent of its pre-Covid-19 passenger flight schedule from October onwards. The airline is operating 8 per cent of its pre-pandemic schedule this month, up from 3.5 per cent in May.

Chief customer and commercial officer Ronald Lam Siu-por revealed the airline expected to operate as much as 20 per cent of its pre-Covid passenger flight schedule by August.

“In the coming two months, we plan to ramp up our capacity, especially in August,” Lam said, citing very strong student travel demand from mainland China. “We expect our capacity will go up about 10 per cent, and hopefully get closer to 20 per cent. Beyond August, I think [the situation] at the moment [is] still quite fluid.”

The airline said it was reactivating passenger flights and services “carefully” to ensure the ones they operated were generating cash. The airline also said it was only flying its most efficient aircraft to mitigate rising fuel costs.

In the 12 months leading up to May, the airline had flown 116,000 passengers, against 15.1 million people who travelled with the airline in the year to May 2019. Passenger numbers remain 99 per cent lower than pre-Covid times, while the airline also suffers by not having a domestic air travel network to fall back on.

Company executives noted Hong Kong had some of the strictest travel and quarantine rules anywhere in the world. The city banned entry to non-residents in March last year and is forcing arriving residents to quarantine for up to 21 days at their own cost in a designated hotel.

Hong Kong announced earlier this week a reduction in the isolation period for arrivals from many countries – including ones where Cathay flies to – from 14 to seven days if passengers are fully vaccinated and test positive for antibodies.

The airline is also expecting travel bubbles with other places and a reopening of the mainland border with Hong Kong is likely by the fourth quarter.

The airline’s war chest was boosted by a HK$6.7 billion convertible bond issuance in February and a bond sale in May that raised US$650 million.

The Hong Kong government agreed to extend the drawdown period on a HK$7.8 billion bridging loan until June 2022, which formed part of an earlier HK$39 billion recapitalisation of the airline orchestrated by the authorities.