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After a significant turnaround in travel demand, Cathay Pacific Airlines posted on Wednesday its biggest first-half profit in more than a decade and announced plans to acquire more planes and repay a Hong Kong government bailout package.
The company’s interim net profit of HK$4.3 billion ($550.22 million), compared to a HK$5 billion loss a year earlier, when Hong Kong’s stringent COVID-19 quarantine regulations were in effect, was in line with its projection for earnings of up to HK$4.5 billion.
Due to stricter quarantine regulations for a longer period of time, the requirement to train more crew, and the necessity to bring back grounded aircraft, Cathay has regained capacity more slowly than its nearest rival, Singapore Airlines.
By year’s end, the Hong Kong carrier hopes to operate at 70% of its pre-pandemic capacity, and at 100% by year’s end in 2024. In contrast, 3% a year ago and around 60% at the present time.
When demand picks up, Cathay said it plans to use its purchase rights to purchase 32 Airbus A320neo family planes, expanding its fleet. By 2029, it anticipated receiving the aircraft, bringing the total number of new deliveries to over 70.
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Enhancing Travel Experience
As part of the revamp of its long-haul Boeing 777-300ER cabins, it will also introduce aall-new business class experience in the second quarter of 2024 and a new first class cabin onto the 777-9 aircraft in 2025.
The airline added that it would buy back 50% of the HK$19.5 billion in preference shares held by the Hong Kong government by the end of 2023 and the remaining portion by the end of July 2024, subject to the conclusion of a proposed capital reduction and existing business conditions.
Following the decline of travel demand due to the pandemic, Cathay offered the shares in 2020 as part of a HK$39 billion rescue package from the government and its largest shareholders, Swire Pacific and Air China.
Eugene Law, business development director of brokerage China Galaxy International, said, “The results are not bad, but they may lack special business highlights in the second half.” He added that some investors may decide to take profits following the earnings following the prior rally.
As of 0605 GMT, Cathay Pacific’s gains have decreased to 0.2% from 0.9% following the revelation of the results. The more inclusive Hang Seng Index declined by 0.2%.
CEO Ronald Lam stated that by 2024, the industry’s two primary problems—a lack of skilled labour and problems with the supply chain—should have improved and returned to normal.
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Source: Reuters
