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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good Afternoon. Welcome to the Cathay Pacific 2021 Quarterly Analyst Webcast. Thank you for joining us. Before we begin, we would like to go over the rundown for the webcast.
We will begin with a presentation by Chief Financial Officer, Ms. Rebecca Sharpe, after which, we will hold a Q&A session with our speakers. Slides from the presentation will be displayed alongside the live video for your convenience. A copy of the slides has also been sent to you by an email or you may download a copy by clicking on the link in the upper left of the window. You are invited to submit your questions at any time during the webcast via the submission box in the bottom right of the window. Our moderators will then read these out during the Q&A session. With that in mind, allow us to introduce our speakers, Chief Financial Officer, is Rebecca Sharpe; and Chief Financial and Commercial Officer, Mr. Ronald Lam. Now I'd like to invite to Ms. Sharpe begin the presentation.
Thank you, and good afternoon, everyone or maybe it's good evening or even good morning depending on where and when you're watching this presentation. Let me just move to the first slide.
We marked our 75th anniversary in September this year. And I think it's fair to say that we still continue to go through the most challenging period in our history. Although as you will see from the following presentation, things have started to improve a little for our business in the second half of this year, though we're still, as I say, in the toughest part of our history. Today's presentation is in 3 parts: A reminder of the ongoing responses to COVID-19, how we're dealing with the very dynamic and uncertain times that we're continuing to operate through. We'll then do a summary of our operational performance this year-to-date.
So that's a combination of the interim results we presented to you back in August, plus the figures we've reported through the traffic reports each month. And then we'll touch on the outlook as the third section of the presentation and then followed with an opportunity for you to ask us any questions. So with that, I will start on our first section. This is our responses to the COVID-19 challenges. I presented this slide in August. So it's included here partly for your easy reference. But it's also been updated with some new data points. and I'll highlight a few of these here.
Firstly, if I start on the right with the fleet. So the top section is the October year-to-date numbers for this year. Starting with the fleet, our fleet numbers have gone down slightly by 2 aircraft. That was a combination of 1 new delivery and 3 lease returns. But the figure I want to highlight really here is the change in the aircraft we currently have parked. So you can see that in June, we had 89 parked and now we have 68 parked. The other figure that's changed on this chart is the capacity. So the capacity at the moment is down 93% versus pre-pandemic. Those of you who will remember, we reported this is 95% back in August. So a slight improvement there as well.
And a large number of the aircraft that we've taken out of parking have been to support our cargo business rather than the passenger business. So that's why you don't see too much of a movement on the passenger capacity numbers. The other number that's changed on here is liquidity.
We've added in the October unaudited liquidity figure, but I'll talk about in a little bit more detail on the next slide. Again, this is a slide that I presented in August, where we're showing sort of the progression of our liquidity story from the end of 2019 through to the current time. You'll recall that liquidity, when we talk about it is a combination of the cash that we have in bank accounts, short-term deposit, short-term investments, and it also includes committed facilities undrawn. And those of you also who have been with us on this journey through our past couple of years will recall that within that committed facility is HKD 7.8 billion bridging loan from the government here in Hong Kong. So the unaudited figure at the end of October was $31.7 billion. This is a slight reduction from June and the combination of a couple of factors. At an operating cash burn level, so this is the cash that we use on a day-to-day basis, revenue coming in, cash going out on all the things we need to run the business, not one-offs.
We approximately broke even. So for the period from July through to October, the cash generated was offset by the cash spend, and therefore, we broke even for that period. The small reduction in our liquidity balance versus the June $32.8 billion is a combination of some small loan repayments and some one-off capital expenditure items.
Suffice to say, an operating cash burn or rather breakeven position is a big step forward for our group. In terms of the effective cash and cost management that we've been undertaking for some time now, this is definitely starting to bear fruit. And of course, again, you'll be familiar, but this has been supported, boosted by the exceptionally strong cargo performance that we're seeing in the industry at the moment. So overall, in terms of our liquidity position, I would say it remains at a healthy level for the business in this time.
The second section of the presentation is around our operating performance for the past few months. So I'll start with the Hong Kong aviation environment. Again, I have presented this slide at the last few briefings, and I've included it more than anything, just to highlight what we know that there have been no significant changes during the course of 2021 to the dramatic impact that COVID-19 has had on aviation passengers through Hong Kong. The graph, just to remind everyone shows the dark green is Cathay Pacific customers, the passengers we've carried, and the lighter green is the other airlines, passengers through Hong Kong.
You'll see, of course, from April 2020, the very, very flat line at the bottom of that. I assure you there is a faint green and darker green line there. What we've done this time is added in a graph within the graph to reflect the 10 months of 2021 to show that even though the number is very small, there has been a change. And you can see the difference in the August and September passenger numbers here, and that was driven by primarily student traffic going through to the U.K. and the U.S.A. I'll cover that a little bit more on the next slide.
This slide is setting out the passenger-related statistics and just about to explain what we've included here I've got 4 columns, and what we're trying to show here is this 10-month period to October in each of the years 2019, 2020 and 2021. But also including the first half of this year, the 6 months to June 2021. All of these statistics arguably tell a somewhat similar story. So the 10-month period to October '21 versus the same period in 2020 and in 2019 shows a dramatic reduction versus both years.
You'll recall that in 2020, the first couple of months and as we saw on the previous graph, the first couple of months were quite strong. So that distorted arguably the overall number for 2020 and therefore, makes this year's number dramatically less. And that's applicable across the number of passengers we carried, the RPK and the ASK.
However, the thing that I want to highlight here, which is more relevant to current times, arguably, is comparing October of this year with June of this year because it's a very different story. You can see across all the statistics, a marked improvement in the different -- in the numbers or the metrics. The ASK, the RPK and the passengers carried have more than doubled the amount we carried in the first 6 months of the year. So that's quite a significant step change. Albeit these are still, I know, compared to 2019 quite significantly lower numbers, and the load factor also in this 10-month period has shown us healthy improvement.
Again, I know not back to 2019 levels. So it is a step change, arguably, versus the first half of the year. But the travel restrictions and quarantine requirements that are imposed by governments around the world do continue to disrupt the world that we're operating in. And of course, they have an impact on the supply side, the crew available to mount the flights with us. So it continues to be difficult, but I did want to highlight that the period to October has improved versus where we were in June.
This slide depicts the ASK and the load factors. We've again shown it before by quarter right the way back to 2019. And whilst, of course, it shows the significant reduction in capacity and load factors. The cargo flows that we have been able to carry in the passenger bellies of these flights is supporting the operation of certain routes. You can also see in Q3 of this year, the small pickup, both in load factor and in ASK. And that, as I say, was supported by student traffic through to the U.S.A. and U.K. If I move on to cargo. So the support that the cargo operation gives the passenger operation is arguably a good segue into me talking about cargo. So the cargo market is seeing an exceptional period. We've got passenger belly capacity unavailable because of the far fewer passenger planes flying at the moment globally. We've got the shipping industry in terms of ocean freight, seeing a variety of challenges. And then the supply chain globally is also facing challenges. So these all converge to drive a strong demand for air cargo, of which we can be the beneficiary.
The chart here, similar to the one I showed for the passenger statistics, is showing the 4 columns again, the 10-month period for '21, '20 and 2019 and also the first half of this year. Again, you can see a little bit of a similar story in the 10 months for 2021 versus 2019. The reduction is mainly due to the unavailability of passenger belly capacity. But the story versus 2020, 10 months to October is a little bit different. The capacity was restricted during February to May due to quarantine requirements or measures, but the cargo, so you can see that in the AFTK number on the first line, a little bit lower. But the cargo carried is very similar during the 2-year period. And that is because the load factors have been higher.
So we've carried a similar amount of cargo whilst the capacity has been down. We've continued is also with a strong focus on maximizing our available cargo capacity. So we've got our freighters now flying fully, and we've got many cargo-only passenger flights operating at the same time. That's the flights where we're using a passenger plane but just carrying cargo, no passengers. And we've also added a couple of freighters this year, so we now have a total of 6.
Just as a reminder, that's a passenger aircraft where we've taken some of the seats out the aircraft so that we can carry more cargo in the cabin. We've also been able to add additional capacity by chartering some flights from our all-cargo subsidiary Air Hong Kong. So then if we look at this graphically, Again, similar to the passenger graphs by quarter, the load factor capacity. And the -- one point to highlight here is October is just a single month, so it's not fully comparable. You can see the strong capacity in Q3 of this year.
The second half of the year typically in cargo is a stronger period, and we are definitely seeing that. And you can see that the load factors are remaining much higher than historically and particularly into October at the 82.9% that you see there on this chart. Finally, in this section, just to touch briefly on our subsidiaries operations. which continue to be a reflection of the passenger or the cargo story. So depending on which sector their subsidiary is operating in, they're very closely aligned to those. So Air Hong Kong, as our all-freighter cargo operator is definitely benefiting from the continued strong cargo market performance, whereas HK Express and the airline service subsidiaries continue to be negatively affected by the low numbers of passengers that are flying at the moment.
The third and final section is on a bit about the outlook. So the first slide I want to share here and -- or the first -- the next 2 slides actually are representing what we announced in our traffic report earlier in November.
So this slide is looking at the full year results. You'll recall the loss we made in 2020 of HKD 21.6 billion. And then the first half loss we made reported in August for this year of HKD 7.6 billion. As I noted earlier, with reference to the operating cash position the second half of the year is typically the stronger half from a cargo and in more normal times from a passenger perspective. So last year's comparison where the second half was worse than the first half, was primarily driven by some one-offs, if you recall, restructuring impairments, et cetera. However, the combination of the seasonality and the continued focus on our effective cost and cash management, subject to travel restrictions and other operational constraints that we continue to face due to COVID. We do expect that our second half results will be a considerable improvement on our first half results for this year. Although overall, we will still make a substantial loss for 2021.
Looking at this in terms of monthly operating cash burn, I know this is a topic close to many of your hearts. The other financial element that we commented on in our traffic report in November was the operating cash burn and the fact that through July to October, we had, in fact, approximately broken even from an operating cash perspective, so our revenue funded our operating cost. And you can see here on this slide, sort of the trajectory that we've been working through over the past couple of years as we work to bring that operating cash burn down -- continuously down.
Underpinning, of course, these figures is our thoughts on outlook with respect to our different sections of our business. So If I'll talk about the passenger services side first, in addition to the continued need, obviously, to increase vaccination levels globally, I think it goes without saying that the pace and timing of our recovery remains highly uncertain and the recovery of the industry as a whole. As we've said previously, we do ascribe to the IATA projections for the longer-term outlook. But nearer term, it's much more difficult to assess. We do see and are seeing more transit opportunities as some of the overseas markets start to open up.
However, further recovery will be dependent on travel restrictions, quarantine requirements and border openings, both here in Hong Kong and globally. In terms of cargo outlook, of course, you'll know from what I've already spoken about, this is a definite strong point for us, particularly in the second half of this year, and we anticipate the imbalance between supply and demand globally, continuing with that lack of passenger belly space and constraints in the ocean freight supply chain. We have been operating, as I said, put our full freighter capacity, and we'll continue to try and maximize our cargo capacity through the continued operation of cargo-only passenger flights and utilizing our 6 freighter aircraft as fully as possible. Indications also continue to be positive on the demand side for this sector.
So overall, we are planning for a strong cargo performance to continue. In addition to commenting on our passenger and cargo outlook, I also wanted to highlight a couple of other aspects of our business, which are important to our recovery profile. So firstly, in July, we launched Cathay, which is our new premium travel lifestyle brand, which brings together all that we love about travel with the everyday lifestyle of people. Also in July, we launched a new series of Standard Chartered Cathay Mastercard credit cards. And we'll continue to roll out a range of new offers, some of which are highlighted on this slide, including spending, dining, hotels and wellness as we go forward.
The second aspect that I wanted to touch on today is sustainability. I know a number of you on the call are very interested in what we're doing in this area. Climate change has the potential to be an even more disruptive crisis than the pandemic, Although as we sit here today, we perhaps find that hard to believe. But we do believe it calls for increased efforts by all of us globally. In May, we announced our commitment to net 0 carbon emissions by 2050. And whilst we recognize this is a challenging goal, we do believe it's essential in our ongoing efforts towards a sustainable future. We have a number of initiatives ongoing in this space, including investing in sustainable aviation fuel and you all have also seen that in September, we announced our commitment to utilizing 10% of SAF Sustainable Aviation Fuel in terms of the fuel we consume by 2030.
We also have our ongoing carbon offset program and the continued upgrading of our fleet to reduce the emissions. So as each of the new aircraft progressively get delivered, that obviously has an impact on our admissions. Finally, to conclude the presentation before opening up for questions. This is the final slide. And what I've tried to do here to summarize the key financial figures or metrics that we've talked about. In conclusion, I just want to sort of continue to say that COVID-19 continues to pose significant challenges for the Cathay Group. As we mark our 75th anniversary year, it definitely remains the toughest period in our history.
The decisive steps taken both last year and into this year was very difficult, in some cases, have resulted, as planned, in the group becoming more focused, efficient and competitive. And this can be seen in our progressively reducing operating cash burn. We've definitely started to see things improve from a financial perspective in the second half of this year. This is driven by the exceptionally strong cargo season that we're experiencing so far, together with our continued focus on effective cost and cash management. And the continued hard work of all our people, whether it be the air crew handling the tight travel restrictions or ground staff in our offices. Their focus on delivering service excellence in these most challenging of times is unwavering. And this is very much appreciated by all of us.
Now it would be remiss of me not to caveat this positivity with reference to the uncertain world that I know -- we all know that we are living through at the moment. travel and operational restrictions continue to greatly impact our ability to mount flights. And we're still facing many challenges to both our passenger and our cargo business as the COVID-19 situation continues to evolve around the world.
However, a healthy liquidity position, coupled with the now much more focused, efficient and competitive business and the clear 2-brand strategy in terms of the premium brand airline at Cathay Pacific and our low-cost carrier HK Express positions us well to take this business forward out of the crisis. And we remain absolutely confident in the long-term future of our 2 airlines and in our important role as part of Hong Kong aviation -- the aviation hub in Hong Kong and the critical role that Hong Kong plays in the Greater Bay Area and beyond. Thank you. And now we can open for questions.
Thank you, Michele. We'll now hand over to our moderator, General Manager, Corporate Affairs, Mr. Andy Wong, to begin the Q&A session.
Great. Thank you.
If I may ask Ronald to address the first question from Sedona Fong of Credit Suisse.
With the tightening travel restrictions, how is Cathay Pacific adjusting the capacity for December and also for the first quarter of 2022? And how do we see our longer-term competitiveness under the clear 0 strategy in Hong Kong being affected when we compare this to other airlines, which the operations have largely resumed?
Thank you for the question. Firstly, on the short term, we have made announcement that we are canceling a number of floods in December due to our operational constraint in this month. And we are now working on our schedule on the passenger front for the first quarter. And the situation is very fluid at the moment. So I don't think we have a solid plan we can share at this point. But we put our customer experience as a first priority. So we will do our best to keep our scheduled commitment as far as possible. But at the same time, we are facing a lot of operational uncertainty due to the evolving pandemic situation worldwide.
On the second question about the long run, no doubt, I think Hong Kong and Cathay Pacific, we are lagging behind compared to many other airlines in terms of our capacity resumption on the passenger front. This is due to the clear 0 strategy of Hong Kong and Chinese Mainland. But I believe this is a temporary issue. No doubt there will be a gap for the foreseeable future. But I don't think this clear 0 strategy will remain forever.
At some point in time, Hong Kong and Chinese Mainland will open up to international market. And in fact, in recent weeks, we've been hearing from the main -- Chinese Mainland authority from the media that they would consider opening up with international border subject to more than 85% vaccination rate as well as having an effective cure for the COVID-19. And both are under pretty positive development so far. So we do have hope that sometime in 2022, the Chinese Mainland government and Hong Kong government may consider opening up internationally. So we will watch that with keen interest. So meanwhile, there will be a gap, but I don't think it will cause any long-term structural issue to us.
Thank you. Next question, if I may turn to Rebecca also from Credit Suisse, Chan Lok Kan. Two-part question. The first part, can you tell us a bit more about the fuel hedging position and the percentage for this year and next year? And also the number of aircraft that will be in service or that will not be in service before the useful life of first half in 2022?
Thank you for your question. In terms of fuel hedging, we continue to follow the policy that we followed for a number of years, where we utilize a framework, and we hedge forward certain percentage over a couple of years. The last announcement we made on that information can be found in the analyst briefing in August. We haven't published any further information on that as yet. So I can't share specifics of that. But yes, if you make reference to the information in the analyst briefing from August, that does show the trajectory forward into 2022.
And the second question was on aircraft. Again, that's something we continue to look at in terms of requirements for adjustments through the course of this year. But at this point, we haven't got that information that can be published.
If I may stay with you. There are a few questions on the same topic. So I will just gather them. Mainly, are there any more guidance you can tell us about the loan repayment, refinancing, aircraft financing and also maybe CapEx plan for the coming year? That would affect the cash flow because those were not in the guidance.
I think as I've shared before, we continue any new deliveries of aircraft. We continue to finance those specifically an aircraft-by-aircraft basis, they will be financed each time we get one delivered. We continue to look at financing. I don't believe we disclose other than is in our published accounts, the sort of current and then longer-term repayment schedule. So there is information already in the public domain to that -- on that to some extent. That, of course, will be updated with our annual results.
In terms of financing, perhaps I can just talk a bit more broadly as I've said before, in terms of managing our liquidity through this very difficult situation, the balance that we have today is healthy and arguably quite high for us. But given the level of uncertainty around us, we continue to want to keep it at a more significant level. And so in terms of whether we would take on new finance, we continue to look at opportunities. If there's something available for a reasonable cost, we will consider it.
But as I say, at the moment, the balance is healthy. So that's done a little bit more opportunistically than it is in terms of a definite need.
So just one more quick question, Rebecca, on [ C1 ] cash flow. So from JPMorgan. How do we reconcile the operating cash burn and the monthly cash burn? Are these referring to the same definition?
Yes. So we tend to talk in terms of future numbers. It's all operating cash burn. And what we mean by that is the -- what I would refer in accounting type financial speak as the operation day-to-day things. It does include things like metered repayments for our aircraft because that's an essential operating cost as far as we are concerned. What it doesn't include is some of the one-off capital expenditure. I think we have got the definition on the slide, if I go back to Norway. Scroll through it. Let me see. We have got it at the bottom of that page in terms of specifics. But yes, average is the actual as per the statutory accounts. Our going forward number is similar principle. It's just the one-offs that are excluded generally.
Okay. For the next 2 questions, if I may come back to Ronald actually. So it's about the outlook, of the market outlook. So first question from HSBC, what impact have Omicron have on the winter holiday travel bookings? And actually, a follow-up question would be, when the travel restrictions are being lifted, would Cathay Pacific swiftly resume flights and would this incur unnecessarily high cost to the company?
Okay. Thank you. On the first question, we only learned about the Omnicom news late last week. So it's too early to assess the impact on the travel demand. But I think the Hong Kong government has been very sweet in reacting to the Omnicron news. And recently, a number of countries have been upgraded from Group B risk level to Group A meaning that foreigners, non-Hong Kong residents would not be able to come to Hong Kong from those origins.
So there has been some impact, but it's too early to say as the situation is still evolving.
On the second question, yes, I think we've been working on different scenarios in terms of recovery. And the main consideration we need to take in terms of ramping up our flight capacity on the passenger side is mainly twofold: firstly, is on the aircraft front. As Rebecca mentioned, we have a number of aircraft parked, but we do have the flexibility to retrieve them within a certain notice. And we are reviewing this situation actually on a weekly basis. So we believe we have every agility to react to the market recovery any time.
The other constraint, of course, we need to consider is our crew resources. And this is an area we've been closely watching as well. And at the moment, we do have sufficient crew, and we believe we are able to react to the recovery when we acquired subject to the operational constraint at that time that it will be imposed by the government.
Okay. So just a quick follow-up question on that. Is there any guidance to the overall Q4 ASK?
We are running at a little bit higher than 10% ASK for October, November. And for December, we expect the trend will be quite similar. So I think it's around 10%, I would say, subject to the final schedule.
And also on Ronald, one more question from DBS. What is the latest status of the international airport slots? Are we getting some exemptions and what's the outlook?
Well, so far for the winter season, which started in late October, the current season, I think we, by and large, we are okay in terms of slot. For summer season, which will start around end March next year. We are closely liaising with different airports worldwide. We don't think Hong Kong airport will be an issue. But I think we are liaising with various airport worldwide to see the situation. And we believe and hope that those other airports will be flexible considering the pandemic situation in granting -- continue to grant us the historical slot. But certainly, this is a key issue to watch.
Okay. Next question, I think going back to Rebecca. Still a lot of questions on cash burn. So here it is. So how did you achieve near breakeven for operating cash burn? Can you give us a bit more detail, especially when passenger traffic is still at a very low level. Is cargo the main reason?
And since your other subsidiaries like HK Express, catering are also mostly related to passenger business. Would you expect a strong cargo conditions to prevail in 2022? And relating to that, can you also comment on how this may influence your long-term thinking on cargo versus passenger within the group?
I'll perhaps ask Ronald to supplement on the cargo future in the group. Yes, you're right. The big part of the operating cash breakeven is the strong cargo performance. So the load factors, as you saw in the data are somewhat exceptional, the amount of cargo that is being carried and the rates that you're able to achieve at the moment being seen all across both the air cargo industry and the ocean freight industry are very strong. So that is a big part of our operating cash breakeven position. But in addition to our management of costs, the work that was undertaken last year in terms of working with suppliers to take cost out, reshaping contracts, et cetera, and that close management, no discretionary spend, et cetera, that have continued into this year is also a big part of why we are set up in a much better sort of cost structure to take our business forward. So it is a combination. But yes, the cargo is the more dominant factor, I would say, in terms of the current position. the passenger, as you rightly commented, is quite a small part at the moment. It is a cargo story very much. And in terms of sort of cargo going forward, as I said, we can expect the strong cargo performance to continue in the media. You see the sort of discussion around the freight markets, both at sea and in the air, expected to continue to be strong. And in terms of sort of cargo as a part of our business going forward, I think the cargo market, albeit I've only been involved with Cathay for the last 10 months, but based on sort of my understanding and knowledge of the industry, it can be a little bit fickle.
So if you look back over the years, you can see different stories being portrayed. So at the moment, yes, it's very, very strong. How long that will continue for is an open question, I guess. But I don't know, Ronald, whether you wanted to comment on anything to do with cargo versus passenger going forward?
Sure. Well, first of all, just to be clear, at the moment, we are running around at 70% of our pre-pandemic cargo capacity. So we are still down compared to 2019 before the pandemic. And the reason is that we have fewer passenger flights that are running, which also carry quite a lot of cargo in the passenger aircraft belly. The current performance of cargo is a pricing or use story. Despite the lower capacity, we are able to compensate that with higher yield on the cargo front.
But I don't believe the situation will continue forever because at the moment, we are under a very exceptional market where the logistics chain worldwide has been impacted by COVID-19, whether it's by sea or by air, and therefore, we are able to enjoy higher yield than normal, but that's not going to continue. So we're not going to count on the current situation to project into the long run.
Having said that, I think the pandemic will have a medium to long run impact on the whole market's cargo capacity because many airlines like us have decided to retire some of our passenger car earlier, have decided to permanently some of our aircraft and other airlines are doing the same. So in the next coming few years, the cargo capacity provided by the passenger belly will reduce overall. So it will take some time for that capacity to recover. So we do need to look at that situation and to see whether there's any opportunity for us to add back capacity through production freighter or converted freighter. So this is something we'll be watching very closely internally.
Thank you, Ronald, if I may stay with you. Another question, this time on the travel lifestyle side. So Cathay launched the travel lifestyle platform recently. So what is the plan going forward? And when do we think it will start to contribute to the P&L?
Right. Thank you for the question. Well, first of all, let me explain the idea behind, right, why we are stepping into the lifestyle front. Traditionally, right, for the past 75 years, we have established a very strong brand, first of all, and we have very strong relationship with our customers. We've got more than 10 million members worldwide that have signed up with us through the Asia Miles and Marco Polo program. So we've got a very strong foundation. But so far, our engagement with our customers is mainly through travel. And even for the frequent travelers, they travel a number of times in the year.
So the engagement is around every journey, and we now do see that there's a strong opportunity for us to engage with our customers on a more frequent basis. So we want to go from several trips a year to engage our customers in their day-to-day life. I think that's the idea behind. Another reason is that we have a very strong currency within our ecosystem already, which is called Asia Miles. And Asia Miles is a very sought after currency in the Hong Kong market and a number of our key markets. So we believe that building on this strong foundation, we are able to step our ways into our customer's day-to-day life by offering them other products apart from travel.
So as Rebecca mentioned, this year already, we have launched some new proposition around dining shopping and coming up, we will offer new proposition around holidays and wellness. So apart from travel, we are planning to expand. Firstly, in the Hong Kong market into these new areas and then into the Greater Bay Area, Chinese Mainland and a number of our key markets moving forward.
We believe that in the long run, this will become a significant revenue stream for our overall business moving forward.
Ronald, thank you. Going back to Rebecca. It's about the government loan. So do you expect the government to further extend the bridging loan facility upon expiry in June 2022?
As you rightly referred to, we -- the bridging loan of HKD 7.8 billion was extended for 12 months through to June of next year. We are very appreciative of the government supporting us with this on the basis that we hadn't needed to draw it down and therefore, wanted but needed the support given the uncertain times. The question is to whether it will be extended again next year, I guess, depends to some degree if we draw it down. And it's too early to say in terms of sort of projection once we draw it down, it gets repaid within 18 months. So it's the question we'll have to assess going forward and not something that I could speak for on behalf of the government to say whether they would comment or let us do it or not at this stage. So too early to say, depending on the liquidity situation at the time, we will review it.
So I think we have time for one more question. And Ron, if I may ask you. If the Hong Kong, China -- well, travel bubble, I think, is the -- I think the question is referring to the reopening, is launched. Regardless of the time to time table for that, what benefit for Six can we quantify. And if Hong Kong is able to get some green light to get the more proposed quota between the travelers traveling between the 2 places.
Okay. When the Hong Kong and Chinese Mainland border opens is certainly good news from our perspective. Our understanding is that the opening will start with land borders between Hong Kong and Guangdong province. So that would not directly benefit us. But we hope that quickly following that, there will be other opening of air borders between Hong Kong and other cities and other provinces in Chinese Mainland. And if that happens, it will certainly benefit Cathay Pacific. We will be looking to launch more flights back into Chinese Mainland, more frequency, et cetera.
So -- but at the moment, I think the opening only applies to point upon traffic between Hong Kong and Chinese Mainland. And we don't expect we'll be allowed to carry passengers by Hong Kong into Chinese Mainland, although customers from Chinese Mainland, they can come out by Hong Kong to overseas market. So the transit traffic is kind of one way. Therefore, we don't believe we can add back the full capacity back into Chinese Mainland even when the borders open up because we can only mainly serve the [ point one ] traffic as well as the one-way transit traffic at the moment. And also for -- I think everyone's reference, before the pandemic back in 2019, our Chinese Mainland flights constitute around 7% of our ASK on the passenger front. So just for reference, this is the kind of capacity size we're talking about.
Thank you to all our hosts, and thank you for your questions. Kindly note that the recording and slides from today's presentation will be available on our Investor Relations website later. If you have any further questions, please write to us at ir@cathaypacific.com, and we will endeavor to respond to them as soon as possible. This concludes the Cathay Pacific 2021 quarterly analyst webcast. Thank you for joining us.