Cathay result gives hope that business is on path to recovery
- Hong Kong’s flagship carrier has for the first time in three years reported a net profit. But challenges remain, so it is important that the airline and the community remain focused
For the first time in three years, Hong Kong’s flagship airline has reported a net profit, a result that has given a lift to hopes the business environment is rising clear of pandemic clouds. With many challenges ahead, it is important that the carrier and community remain focused to avoid stalling the path to recovery.
The net profit figure reported on Wednesday by Cathay Pacific Airways stood at HK$4.26 billion (US$546 million) for the first half of 2023. The figure included a one-off gain of HK$1.9 billion from Cathay’s dilution of its interest in Air China shares from 18.13 per cent to 16.26 per cent.
It is an impressive turnaround from the same period last year, when Cathay racked up HK$4.99 billion in losses amid the city’s stringent travel curbs.
It was also a steep climb from the HK$33.7 billion in losses racked up over three years of pandemic woe, when much of its fleet was grounded and thousands of workers were laid off.
Cathay has gradually increased flights since late last year in response to a surge in demand after Hong Kong joined the rest of the world rolling back travel curbs. The carrier said it now plans to buy back company shares acquired by the government as part of a HK$39 billion recapitalisation package. Cathay also plans to purchase up to 32 Airbus aircraft.
Earnings at Hong Kong’s Cathay soar to HK$4.3 billion in first half of 2023
Passenger flight capacity for Cathay and its budget arm HK Express is still only 60 per cent of pre-pandemic levels, but Cathay Pacific Group chairman Patrick Healy said the company is on track to hit 70 per cent by the end of this year and full restoration 12 months later.
Defending the pace of Cathay’s recovery, he said that compared with key regional competitors, the carrier “is absolutely on track”.
Airline CEO Ronald Lam Siu-por acknowledged there are still plenty of headwinds, including a shortage of manpower and supply chain issues, but he said he expected those problems to “improve and normalise” in 2024.
Cargo revenues fell 10 per cent, reflecting what Cathay officials described as a “weaker global market for air cargo”. Revenue increased 135 per cent in the first half thanks to strong passenger flight business, but the number of visitors to Hong Kong also remains below pre-pandemic levels.
Elevated ticket prices are credited with putting the company’s fortunes on an upwards trajectory, but hefty fares have weighed heavily on the pocketbooks of many fliers.
It is hoped that expanded routes and higher volumes will help bring down high ticket costs. Every little bit helps when the goal is ensuring the economy takes off.
