Thank you, Rebecca. We'll now hand over to our moderator, General Manager of Corporate Affairs, Andy Wong, to begin the Q&A session.
Thank you. First question is from Sean Ng of JP Morgan. There are two parts to the question, let's address first part, first. Are there any new updates pertaining to the Hong Kong, Singapore travel bubble? What are the expectations in terms of new measures taken and the demand uptake compared to what was expected in November 2020?
Let me take that. The Hong Kong, Singapore travel bubble, it really depends on the pandemic situation in Hong Kong. With the recent reduction on the confirmed cases within Hong Kong, our understanding is that both governments from Singapore and Hong Kong, they've been in active discussion. We don't know the timeline yet. As I mentioned, it depends on the pandemic situation in Hong Kong and in Singapore. We'll be watching very closely, working with the government, to be able to activate that as soon as we can. Thank you.
Next part. Any color on when the Hong Kong crew quarantine measures will last? How fast can CX redeploy the crew and aircraft upon the lifting of the restrictions?
First of all, I would like to emphasize that we will support the government in whatever way we can to fight the pandemic in Hong Kong. The crew quarantine situation, we are closely working with the government. At the end of the day, it's the government decision to make, how long this will last, and it would depends on the pandemic situation in Hong Kong. Within Cathay, we are actively encouraging our crew to take up vaccination as soon as they can. So far today, we got pretty encouraging response from our crew community, and we will continue to encourage them to take up vaccination. Once they are vaccinated, we believe, they are better protected as well as their family, and the risk of them bringing in any imported cases into Hong Kong will be further mitigated.
It will be a very good time for us to discuss with the government whether there's any opportunity to adjust the crew quarantine arrangement.
Thank you. Next question is from Chan Lok Kan of Credit Suisse. Part one, given the new crew quarantine, what other measures can we take to reduce the additional HKD 300 million-HKD 400 million loss per month?
I can take that.
Okay.
Yeah. Well, since last year, we’ve been looking at every other ways we can find to reduce our cash burn while preserving our long-term capability to support the Hong Kong aviation hub. We continue to look at all aspects of our cash burn, including working with suppliers, and we would continue to look at every aspect of our business, to make sure that we can find saving in terms of cash, both in terms of cost reduction as well as deferral, as much as we can.
Thanks. Next part, how many more aircraft will unlikely be back into service before the retirement this year?
I'll take that. As I mentioned, we have impaired 34 aircraft for 2020, and that is based on the aircraft that will not be back into service in 2021.
Okay. Thank you. Okay, next question is from Parash Jain of HSBC. On your guidance, given the first quarter of 2021 is almost washed out, are we eyeing for some sort of V-shaped recovery in the second half to achieve capacity to just under 50%? Do we have any visibility as to when can Hong Kong government may relax the quarantine rules given the faster than expected adaptation of the vaccine?
I would say the current situation is still very dynamic. It is hard to predict how the quarantine situation and the travel opening will evolve for the rest of this year. I think our emphasis is that we will remain agile, and then we will capitalize on any opportunity available to us.
Okay. Thank you. Next question is from Jeffrey Tiong of CLSA. Given the collapse in demand, have you considered adjusting your fuel hedging strategy going forward?
We have a standard fuel hedging policy, that has been operating appropriately for the last few years. We don't have any plans to change it. It operates quite mechanically. It's managed through sort of a committee, so no plans to change our fuel hedging policy at the moment.
Okay. Thank you. Next we have Ian Wong of UBS. How much savings can the deferral of Airbus and potentially with Boeing can generate in terms of CapEx spend in 2021- 2023?
To be honest, off the top of my head, I can't recall that number, so we can get back to gentlemen.
Yep.
Moving on to the next part. Of the HKD 28.6 billion unrestricted liquidity as of December 2020, does that include the HKD 7.8 billion bridging loan facility to be unpaid?
Yes, it does include it.
Okay. Thank you. Okay. Next we have Luya You of BOCOM International. Can we get a sense of potential impairment for 2021? Given the number of old-generation wide-body aircraft remaining in the fleet, should we expect similar levels of impairment for this year as well?
That's an interesting question. The assessment that we've done now, based on what we know today, is, as I say, what we've reported in the results for 2020. The situation is extremely uncertain. What we've also done and disclosed in our annual report, is if the recovery were to slip by six months, we've included a what aircraft, or the value of the aircraft as at December 31st, 2020, that would then potentially need to be impaired. The figure we've disclosed there is HKD 0.8 billion of aircraft for six months slippage. We are confident for the moment in the numbers that we've presented in our results. We're just doing that for sort of transparency and awareness in these very uncertain times.
Thank you. Again, we have a question from Jeffrey Kung of CLSA. Is there any sort of dialogue with the government about waiving this for any flight crew in terms of when they get vaccinated?
Well, as usual, we are in very close contact with the government on various issues. We would continue to have dialogue with them. As I mentioned just now, our priority is to get our crew vaccinated so that they can protect themselves and protect their families, and also reduce the risk of any imported cases because of the air crew. We will continue such dialogue with the government.
Okay. Thank you. Next we have Kelvin Lau from Daiwa Capital Markets. How significant would be the vaccine logistics be contributing?
I would say so far, we have transported three shipments into Hong Kong, in terms of vaccines. I must say the volume compared to our overall cargo volume is not significant at the moment. We've been transporting vaccines via Hong Kong to different parts of the world like, into Mexico, into Malaysia. We'll continue to get as much business as we can get from the vaccine shipment. In the overall scheme of things, it's not a very significant proportion of our cargo business at the moment.
Okay. Thank you. Coming on to the last question. We have a question from Ajith Kom of UOB. Are you still receiving grants or rebates from the Airport Authority Hong Kong? If so, when would that expire?
Well, as of today, we are still getting discounts from the Airport Authority on various fronts like landing and parking right, rental charges. The Airport Authority, they've been extending it every two months so far. I think we would observe the situation, and we believe that as long as the airline industry is in a difficult situation, they will continue to assist us.
Okay. Thank you. One more question just came in. Andrew Lee of Jefferies. How many more Cathay Dragon routes have since applied for? Are these only to or from China? How many of them are successful?
Well, as we mentioned during our restructuring announcement last year, we have intention to resume most of the Cathay Dragon route, using Cathay Pacific or HK Express. Resumption of KA routes involve a number of factors. Most important factor is the passenger travel demand, which is yet to recover. It will involve approval for slots at various airports in Hong Kong and outside, as well as some traffic right for certain routes. So far as of today, we have managed to resume five Cathay Dragon routes, using Cathay Pacific as the brand.
Thank you, Andy. Thank you all for your questions. Kindly note that the slides from today's presentation will also be made available to download at our investor relations website later this afternoon. 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 2020 annual results analyst webcast. Thank you for joining us.
Thank you.