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Cathay Pacific reported its highest annual profit in more than a decade as strong travel demand boosted earnings for the Hong Kong-flagged airline, with its boss declaring: “In 2023, we have finally left the Covid-19 pandemic behind us.”
The airline reported a net profit of HK$9.8 billion (US$1.3 billion) for the year on Wednesday, breaking a three-year losing streak including a loss of HK$6.6 billion in 2022.
Cathay shares rose about 4 percent after the earnings announcement.
Profits are the highest since 2010, when they recorded HK$14 billion. Global airline groups, including British Airways owner IAG, have also reported strong profits in the past few weeks, as flight prices remain above pre-pandemic levels.
Rival Singapore Airlines, which released third-quarter results last month, warned that higher fuel prices and higher operating costs could impact its outlook.
Cathay's chief executive, Ronald Lam, said the global imbalance between supply and demand that had led to higher yields, or passenger revenue per mile, would diminish and “return to normal” this year, while headwinds from inflationary pressures and chain issues… Ongoing supply in the aviation industry, in terms of delivery delays and shortages of spare parts, will impact its outlook negatively.
But Cathay's results were “characterized by a marked rise in travel demand,” Chairman Patrick Healy said, in comments reflecting the end of the pandemic's impact on consumers' ability and willingness to fly.
Hong Kong's recovery as an aviation hub “will depend heavily” on Cathay's return, Willie Walsh, head of the International Air Transport Association, said at an event in Hong Kong on Wednesday, although he said the airline was recovering. Faster than expected.”
Its earnings were “fantastic”, according to DBS equity research analyst Jason Sum. But with passenger revenue per mile declining amid intense competition, and with regional airlines adding more flights, this may offset higher passenger traffic for the rest of the year.
Cathay said it was “working to reach 100 per cent” of pre-pandemic passenger capacity during the first quarter of 2025, a delay from its original target of achieving full capacity by the end of 2024.
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DBS expects Cathay's passenger capacity to reach 90 to 95 percent of pre-pandemic levels by the end of this year, with a full recovery expected in the first half of 2025.
“Even if Cathay fails to meet its capacity targets, the resulting limited capacity could support passenger revenues, which could benefit the group overall,” Sum said.
The airline said it will hold global roadshows over the next few months, including in South Africa and Europe, to attract new pilots.
Its pilot workforce remains at about 35 percent of 2019 levels as of last month, according to its union, the Hong Kong Air Crew Officers Association.
Additional reporting by William Sandlund in Hong Kong
