As 2020 drew to a close, Rebecca Sharpe’s employer, Swire Group, asked her to take on the CFO role at Cathay Group in Hong Kong. This was a normal occurrence for employees working within the Swire Group umbrella; Sharpe was working for Swire’s Hong Kong Aircraft Engineering Company (HAECO) as its Group Director, Finance, at the time.

This was at the height of the COVID-19 pandemic. Friends told Sharpe she’d be crazy to take on an airline group role. “I think you can always improve things and create value, whether it’s a terrible situation or a good situation,” she says. “That was my attitude going into it.”

Her journey, being part of the team bringing the company back to profitability, taught her a lot about dealing with uncertainty – something that is very relevant in the current geopolitical climate.

Sharpe joined Cathay in January 2021. The company would be announcing its results in six weeks’ time, having taken a significant hit to its revenues as a result of the pandemic. Sharpe’s first step was to get a complete picture of the company’s finances.

“I was based in Hong Kong and familiar with Cathay, but I didn’t know any of the detail of their 2020 results at that point. I had to put my personal life on hold for six weeks and learn as much detail as I could about the results.” The group lost around HK$21.6bn (£2.06bn) in 2020, the biggest loss in its then 74 years of trading. “I had to work out how I was going to tell this story to the analysts, the investors and the public.” 

Cathay Pacific was probably the worst affected airline during the pandemic, with all its traffic being cross-border and subject to travel restrictions. Hong Kong had particularly strict lockdown rules and things were changing all the time. This created a very uncertain environment in which to operate.

Sharpe’s approach was to focus on what she could control. Liquidity was a major factor that the company could control to some extent, so Sharpe put a lot of focus into it. The finance team continuously updated cash-flow forecasts to ensure the company had enough funds in place. 

Another area for control was the company’s spending. How could Sharpe ensure that everyone in the organisation knew the importance of controlling the company spend? The message needed to be simple, direct and easy to follow.

Her solution was to set four questions that she presented to the entire organisation for people to follow when making spending decisions: 

1. Do I need to spend it?
2. Do I need to spend it now?
3. Can I do something differently to avoid the need to spend?
4. Would I spend it if it was my money?

Those four questions became a mantra around the organisation, says Sharpe. “The beauty of them was that everybody could understand them. So, whether you were really junior or within the senior leadership, they gave people something tangible to base decisions on.” 

It also instilled a sense of ownership among employees. “One of the things that creates uncertainty for employees is when it feels like it’s all in someone else’s hands. If you give them a tool where they feel they can make a difference, it can help to combat that.”

Two-pronged approach

Although there are only so many things you can control in times of uncertainty, you can try to ensure that you’re focused on those, says Sharpe. “We needed to survive, but we wanted to thrive. You can’t ignore what might happen in the longer term.”

The company looked at the situation as having two tracks: one with a focus on short-term survival and one on setting up for the future. “For example, how are we driving efficiency through processes and other aspects of the business so that, when we come out the other side, we can hit the ground running?”

The Hong Kong SAR Government invested HK$19.5bn in preference shares as part of the Cathay Group’s recapitalisation process. That, along with a bridging loan facility and additional investment from ordinary shareholders, gave Cathay access to HK$39bn, giving it a solid security net as it looked to survive and rebuild from the economic impacts of the pandemic.

Cargo had been a strong performer across 2021, which was giving the business some optimism for the future. And then the Omicron variant appeared, resulting in new local rules being put in place overnight. Cargo pilots were told that they would face new restrictions requiring them to quarantine after completing a flight. “We had to ground our freighter fleet for a week while we worked out how best to manage this.”

Sharpe recalls thinking “there goes our last source of revenue”. “I said to myself: ‘Oh my goodness, how are we going to deal with this?’ But then I reflected, this is exactly why we have been keeping liquidity levels elevated, to handle this type of uncertainty.” 

This was a reminder that anything could happen at any time. “Dealing with that uncertainty and how you prepare for it was the hardest thing.”

Back to normality

From early 2023, the focus was to add flights back to the schedule. This would take time; existing pilots had to be recertified, more pilots and cabin crew needed to be recruited, and aircraft needed to be returned from long-term parking. The key was to do this as safely and efficiently as possible in order to get back to pre-pandemic numbers of flights for customers.

As flights came back online, Cathay experienced some short-term financial gain. To ensure the longevity of its rebuild, the Cathay leadership team focused on prioritising the highest demand routes.

“You’re building it back based on customer priorities and customer wants,” says Sharpe. “You naturally make more money that way. The less highly demanded or sought-after routes, capacities or frequencies come through a bit later. By maximising the money we were making, it meant that we could better reward our employees and start paying back the government and issuing dividends to our shareholders.” 

By taking this approach, Cathay returned to profitability in 2023. As we enter another period of uncertainty – albeit with different causes – Sharpe reflects on the lessons she’s learned from the pandemic. “You have to come together as a senior team frequently; nothing beats talking it through collectively with different people from across the business in the same room. We’ve done the same with the current situation. While you keep focused on your long-term strategy, you have to deal with the here and now elements of what you can control.”