Cathay expects first annual profit since 2019 as full recovery looms

Cathay Pacific expects to report a full-year profit – its first since 2019 – as it moves closer to full recovery in its passenger travel business. 

Cathay’s customer and commercial chief Lavinia Lau says the airline group’s “strong performance” in the first half of 2023 has carried on for the rest of the year, and it expects its second-half profit to “surpass” its first-half profit. 

The airline group – which also comprises low-cost arm HK Express – reported a HK$8.8 billion ($1.1 billion! operating profit for the six months to 30 June, reversing the HK$1.3 billion loss in the year-ago period. 

The forecast ends three years of red ink: Cathay had been first impacted by political unrest in 2019, followed by the Covid-19 pandemic a year later, which saw its Hong Kong hub completely shut off. 

Since the city reopened its borders early this year, Cathay has seen marked improvement in its monthly passenger traffic. Lau adds that the airline group is “on track to achieve our 2023 rebuild target”, with flights expected to recover to around 70% pre-pandemic levels by the end of the year. 

In October, the airline “continued to see good demand”, notes Lau, led by a rise in business travel. 

During the month, Cathay carried 1.68 million passengers, up more than three-fold year on year. Capacity doubled year on year, while traffic saw a sharper spike of more than two-fold. 

“The elevated levels of student traffic seen in September subsided as the new school year started. However, we saw an increase in business travel as people attended exhibitions and conventions in Hong Kong as well as trade fairs in nearby Guangzhou, resulting in encouraging passenger volumes in the premium cabins,” notes Lau. 

On cargo, Cathay saw modest recovery in October, with tonnage growing 14% year on year, and up 4% against September’s levels. 

Lau says e-commerce has been a “key driver” in demand, especially as the year-end period approaches. 

She adds: “We anticipate growing demand for fresh produce from our key markets of the Southwest Pacific, the Americas and Japan into Hong Kong and the Chinese Mainland as we enter the main perishables season, while demand for e-commerce shipments is expected to remain strong through to the year end.”