
Cathay Pacific Reports Profit Decline Due to Lower Fares; Growth Plan Remains On Track – Reuters
Cathay Pacific Airways Declares Interim Dividend Despite Profit Drop
By Lisa Barrington
Cathay Pacific Airways announced an interim dividend, citing strong performance despite a 15% decline in first-half profit compared to the previous year, which the airline attributed mainly to reduced airfares.
In addition to the dividend, the airline unveiled an investment program focused on acquiring new aircraft, signaling its entry into a new phase as it continues to recover from the pandemic’s impact, which had significantly grounded its fleet and led to extensive staff layoffs.
“Our robust performance in the first half of the year was largely driven by strong travel demand and the performance of our cargo business,” stated Chair Patrick Healy.
The airline’s profit for the six months ending in June fell to HK$3.85 billion (approximately $493.76 million). Healy noted that this decrease was largely due to the normalization of ticket prices. Last year, a worldwide imbalance in flight supply and travel demand, following the lifting of pandemic restrictions, had elevated ticket prices and passenger yields, a measure of flight profitability.
As global flight capacity has largely returned to pre-pandemic levels, airlines are now seeing a return to more normalized yields and decreasing fares. Chief Customer and Commercial Officer Lavinia Lau explained that short-haul fares out of Hong Kong have returned to typical levels after last year’s peaks, and many long-haul routes are also witnessing decreases, with some dropping over 20%. However, routes to the United States and Canada remain popular, maintaining higher demand from mainland China and Hong Kong.
Cathay’s overall load factor, which represents the percentage of available seats that are filled, declined to 82.4% from 87.2% in the same period last year. Additionally, the passenger yield fell by 11% to HK68.9 cents.
The airline’s low-cost subsidiary, HK Express, reported a loss of HK$73 million for the first half, with CEO Ronald Lam highlighting intense ticket price competition from both local and international airlines.
In terms of recovery, Cathay, which faced significant financial losses and workforce reductions during the COVID-19 pandemic, recorded its first annual profit in four years this past March and issued its first dividend since 2019.
By the end of July, Cathay repaid the final portion of HK$19.5 billion in preference shares issued to the Hong Kong government as part of a pandemic-related rescue package totaling HK$39 billion.
Despite slower capacity recovery compared to rivals like Singapore Airlines, Cathay is poised for growth. The airline postponed its target to restore full pre-pandemic flight capacity from 2024 to early 2025, but Healy indicated they are on track to meet this new timeline.
As part of its fleet enhancement strategy, Cathay plans to purchase 30 Airbus A330-900 wide-body aircraft, with options for an additional 30. This acquisition is a key component of a larger HK$100 billion (about $12.83 billion) investment over seven years that will also focus on improving cabin products, lounges, and sustainability initiatives.
Lam emphasized that this investment aligns with Hong Kong’s goal to strengthen its position as an aviation hub, especially with a new third runway expected to be fully operational by year-end. The airline is currently operating with 3,100 of the 3,400 pilots it needs and is actively training and recruiting to fill the remaining positions.
Healy mentioned that Cathay plans to increase its workforce by 5,000, reaching a total of 29,000 employees, and expand its destination offerings from the current 80 to 100 by 2025.