Cathay Pacific Expects to Profit $4.5 Billion, Stock Soars
July 14, 2023 – Cathay Pacific announced on Friday its expected profit of HK$4 billion to HK$4.5 billion for the first half of 2023, a significant turnaround from the HK$5 billion loss suffered in the same period last year. The news sent the company’s stock price soaring by over 5%.
The airline attributed its improved financial performance to the gradual increase in carrying capacity after quarantine requirements were lifted in September 2022. Cathay Pacific’s airlines and subsidiaries have seen a substantial improvement in their performance compared to the first half of 2022, as stated in their 2022 report.
Additionally, Cathay Pacific disclosed that its equity interest in Air China would be reduced from 18.13% to 16.26% due to the issuance of new A shares by Air China to third-party investors. This reduction is expected to result in a one-off non-cash income of approximately HK$1.9 billion for Cathay Pacific in the first half of 2023.
In other positive news, Cathay Pacific reported strong passenger and cargo volumes for June 2023. The number of passengers carried by the airline in a single day during the month reached a new high since the outbreak of the pandemic. This indicates that the company is successfully rebuilding the flight network of the Hong Kong international aviation hub.
During the month of June, Cathay Pacific carried 1.5486 million passengers, marking a staggering 931.9% increase compared to the same month in 2022. The passenger load factor saw a 20.7 percentage point increase to 87.7%, while the transport capacity increased by 379.6% year-on-year. In the first half of 2023, passenger numbers carried are expected to increase by 2,230%, capacity by 1,111%, and revenue passenger kilometers by 1,685%.
Cathay Pacific also recorded a 6.4% increase in cargo volume in June 2023 compared to the same month last year, reaching 111,200 tonnes. The cargo revenue ton-kilometers increased by 16.3% year-on-year. However, the load factor decreased by 6.7 percentage points to 61.7%. In the first half of 2023, the cargo volume is expected to rise by 23.8%, the transport capacity by 117.6%, and the cargo revenue tonne kilometers by 83%.
The positive news from Cathay Pacific aligns with a report by the China Air Transport Association, which projected a recovery in passenger traffic for the second half of 2023. The report predicted that there would be two passenger traffic peaks in the second half of the year, driven by summer sports events and the National Day Golden Week. The association also expects domestic passenger traffic to exceed 2019 levels.
Cathay Pacific’s expected return to profitability and the positive forecast for the airline industry in the second half of 2023 have contributed to the increased investor confidence, leading to the rise in the company’s stock price. The airline is optimistic about its future prospects and aims to continue its growth trajectory in the coming months.