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Cathay Pacific posted its highest annual profit in more than a decade as strong travel demand boosted the Hong Kong flag carrier's earnings, with its chairman declaring: “In 2023, we finally put the Covid-19 pandemic behind us. Behind you.”
The airline reported full-year net profit of HK$9.8 billion ($1.3 billion) on Wednesday, breaking three consecutive years of losses, including a loss of HK$6.6 billion in 2022.
After the financial report was released, Cathay Pacific's share price rose nearly 4%.
Profit hit the highest level since 2010, when it recorded HK$14 billion. Global airline groups including British Airways owner IAG have also reported strong profits in the past few weeks as airfares remained above pre-pandemic levels.
Rival Singapore Airlines released its third-quarter results last month, warning that higher fuel prices and rising operating costs could hurt its outlook.
Cathay Pacific Chief Executive Peter Lam said yields, or passenger revenue per mile, driven up by a global supply-demand imbalance will reduce and “normalize” this year, while inflationary pressures and ongoing supply chain issues in the airline industry posed headwinds. Delivery delays and parts shortages will have a negative impact on its prospects.
But Cathay Pacific chairman Patrick Healy said in comments that Cathay Pacific's performance was “characterized by a significant surge in travel demand”, reflecting the impact of the end of the epidemic on consumers' ability and willingness to fly.
Willie Walsh, president of the International Air Transport Association, said at an event in Hong Kong on Wednesday that Hong Kong's recovery as an aviation hub will be “heavily dependent” on Cathay Pacific's recovery, although he said the airline has been recovering. Faster than expected.”
Jason Sum, an equity research analyst at DBS Bank, said its earnings were “very impressive”. But he said regional airlines are adding more flights as competition increases and revenue per passenger mile falls, which could offset higher passenger traffic for the rest of the year.
Cathay Pacific said it was working to “reach” 100% of pre-pandemic passenger capacity within the first quarter of 2025, a delay from its original target of reaching full capacity by the end of 2024.
DBS Bank predicts that Cathay Pacific's passenger capacity may reach 90% to 95% of pre-epidemic levels by the end of this year, and is expected to fully recover in the first half of 2025.
“Even if Cathay Pacific fails to meet its capacity targets, the resulting tightening in capacity is likely to support passenger earnings, potentially benefiting the group as a whole,” Sum said.
The airline said it would hold global roadshows in the coming months, including possibly in South Africa and Europe, to attract new pilots.
As of last month, its pilot workforce was still about 35% of 2019 levels, according to its union, the Hong Kong Cabin Crew Association.
Additional reporting by William Sandlund in Hong Kong
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