Cathay Pacific is being investigated and faces possible legal action over an Omicron variant coronavirus outbreak in Hong Kong that began with the airline's employees, the city's leader said Tuesday.

The revelation came as chief executive Carrie Lam announced the suspension of all kindergarten and primary schools until after the Lunar New Year in early February.

Like China, Hong Kong maintains a strict zero-Covid strategy that has kept cases low but largely cut the international finance hub off from both the mainland and the rest of the world for the last two years.

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, Hong Kong leader Carrie 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, which is also carrying out a crackdown on democracy activists and Beijing critics, 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.

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