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BLOOMBERG
Cathay Pacific Airways Ltd expects its strong recovery from the Covid crisis to continue through the rest of the year after the carrier announced its biggest half-yearly profit since 2010.
“We’re extremely pleased with the performance to date,” Chairman Patrick Healy said at a post-earnings media briefing. “We expect to see a solid performance through the rest of the year.”
Net income totalled HK$4.3 billion ($550 million) in January-June, the best half-yearly return in 13 years. Operating profit hit a record HK$8.8 billion, lifted by the combination of strong demand and high ticket prices.
Cathay expects to reach 70% of pre-pandemic passenger flight capacity by the end of 2023 and 100% by the end of next year.
The improvement will enable the airline to this year buy back half of the preference shares issued to the government as part of a 2020 recapitalisation plan, Healy said. The remainder will be bought back before the end of 2024.
While overall revenue soared 135% to HK$43.6 billion, cargo revenue, which helped keep the airline afloat during the pandemic, slipped 10%.
Net income was in line with a forecast Cathay made last month. Hong Kong’s main carrier had posted losses in the first six months of 2020, 2021 and 2022.
Cathay took longer than most to join the post-pandemic travel boom, as Hong Kong was slower in dropping travel restrictions.
The likes of Singapore Airlines Ltd, British Airways-parent IAG, Air France-KLM and the major American carriers have posted better-than-expected or record-breaking earnings.
Cathay’s passenger traffic is still only about 50% of pre-pandemic levels as it takes time to bring staff back in and lift capacity to cater to the rebound in travel demand. It flew 7.8 million passengers in the first half.
“We recognise there have been challenges across the aviation industry that have hindered our ability to deliver the highest service levels that our customers expect,” Healy said.
Cathay added that it has secured purchase rights for up to 32 Airbus SE A320neo family jets, which it will exercise by September 30.
Bloomberg News previously reported that Cathay planned to add as many as 50 of Airbus’s most popular single-aisle jet as part of an expansion of its fleet. It is also seeking to lease as many as 18 A321neo aircraft.
The airline confirmed it will introduce a new first class seat for its Boeing Co 777-9 aircraft. It has 21 on order for delivery starting in 2025. The carrier is also launching a new business class suite as part of refurbishing its Boeing 777-300ERs.
CEO Ronald Lam gave staff more details about a new profit sharing plan for the 2023-2025 financial years. In a memo seen by Bloomberg News, Lam said a hypothetical payout would amount to 4 weeks of profit pay based on the airline’s results for the second half of 2022 and the first half of 2023.
Cathay’s shares were little changed in Hong Kong.