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Cathay Pacific reported its highest annual profit in more than a decade as strong travel demand buoyed the Hong Kong flag carrier’s earnings, with its chair declaring: “In 2023, we finally left the Covid-19 pandemic behind us.”
The airline posted net profit of HK$9.8bn (US$1.3bn) for the year on Wednesday, breaking a three-year streak of losses including a HK$6.6bn loss in 2022.
Cathay shares rose nearly 4 per cent after the earnings were released.
The profit is the highest since 2010, when it recorded HK$14bn. Global airline groups, including British Airways owner IAG, have also reported strong profits in the past few weeks, as airfares remain higher than pre-pandemic levels.
Rival Singapore Airlines, which released its third-quarter results last month, warned that higher fuel prices and rising operating costs could weigh on its outlook.
Cathay chief executive Ronald Lam said the global supply-demand imbalance that had driven up yields, or passenger revenues per mile, would diminish and “normalise” this year, while headwinds from inflationary pressures and persistent supply chain issues in the aviation industry, in terms of delivery delays and parts shortages, would affect its outlook negatively.
But Cathay’s results were “characterised by a notable surge in travel demand”, said chair Patrick Healy, in comments reflecting on the end of the pandemic’s influence on consumers’ ability and willingness to fly.
The recovery of Hong Kong as an aviation hub would be “heavily dependent” on a Cathay comeback, said Willie Walsh, head of the International Air Transport Association, at an event in Hong Kong on Wednesday, although he said the carrier had been recovering “faster than expected”.
Its earnings were “remarkable”, according to DBS equity research analyst Jason Sum. But as passenger revenue per mile comes down amid stiffer competition, with regional airlines adding more flights, this could offset higher passenger traffic for the rest of the year, he said.
Cathay said it was “working towards reaching 100 per cent” of pre-pandemic passenger capacity within the first quarter of 2025, a delay from its original goal of achieving full capacity by the end of 2024.
DBS projects Cathay’s passenger capacity might reach 90 to 95 per cent of pre-pandemic levels by the end of this year, with a full recovery expected in the first half of 2025.
“Even if Cathay falls short of its capacity goals, the resulting tighter capacity could support passenger yields, potentially benefiting the group overall,” Sum said.
The airline said it would hold global roadshows over the next few months, including potentially in South Africa and Europe, to attract new pilots.
Its pilot workforce is still at around 35 per cent of 2019 levels as of last month, according to its union, the Hong Kong Aircrew Officers Association.
Additional reporting by William Sandlund in Hong Kong
