Hong Kong’s Cathay Pacific expects first annual profit in 4 years, passenger numbers to reach 95% of pre-pandemic levels

Hong Kong flag carrier Cathay Pacific Airways expects its first annual profit in four years as the airline is bullish its passenger numbers will reach 95 per cent of pre-pandemic levels by end of this year amid robust growth in travel demand.

Chief financial officer Rebecca Sharpe on Friday told analysts that the airline expected to return to profitability throughout the whole year after three consecutive annual losses.

“The strong performance of the airline and subsidiaries in the first half has continued,” she said.

“With respect to the consolidated group result, we expect that the second-half profit in 2023 will surpass the result from the first half and that the group will achieve a consolidated profit for the overall year, which will be our first profitable year since 2019.”

Passenger numbers are expected to reach 95 per cent of pre-pandemic levels. Photo: Elson Li

She said that Cathay Pacific, including low-cost unit HK Express, had recorded a better performance in the second half of the year compared with the first.

The group said it was on track to meet its target of operating at 70 per cent of pre-pandemic passenger flights covering 80 destinations in December.

Hong Kong became one of the last cities in the world to scrap all Covid-19 travel restrictions in January, ending three years of lockdown.

The Cathay group in August announced a HK$4.26 billion (US$546 million) half-year net profit, a figure that marked a turnaround in its performance and prompted the carrier to announce its plans to buy back company shares held by the Hong Kong government and purchase up to 32 Airbus aircraft.

The turnaround was attributed to a one-off gain of HK$1.9 billion from Cathay’s dilution of its interest in Air China shares from 18.13 per cent in the first half to 16.26 per cent.

The return to profitability followed losses of HK$33.7 billion over three years during the pandemic that resulted in the airline grounding many of its fleet of aircraft and laying off thousands of staff as part of cost-cutting measures.

Hong Kong scrapped all Covid-19 travel restrictions in January. Photo: Jonathan Wong

The Cathay group gradually increased flights since late last year amid strong demand prompted by the city joining others in the world in rolling back its travel curbs, with more expensive ticket prices also helping to shift the company’s fortunes.

In October, the group carried 1.68 million passengers, a 320 per cent jump from the same month in 2022.

In the first 10 months, the number of passengers increased by 887.4 per cent. No absolute figures were disclosed.

Cathay chief customer and commercial officer Lavinia Lau Hoi-zee said there were more business-class travellers to Guangzhou in October, while the long weekend during the Chung Yeung Festival sparked outbound leisure travel.

This was contrary to the marked presence of student travellers in September.

The group’s cargo business jumped 14 per cent year on year or 4 per cent month on month amid mega sales of Singles’ Day and Black Friday in October.

Lau said she expected more demand for fresh produce from key markets in the Southwest Pacific, the Americas and Japan into Hong Kong and mainland China in the lead-up to the perishables season.

The Cathay group’s recovery came amid further improvements in global travel. Its rival Singapore Airlines posted a 55.4 per cent rise in net profit to S$1.44 billion in the six months to October 31 from the same period last year. It also logged a record quarterly operating profit between July and September, up 17.8 per cent to S$799 million from the same period last year.

Hong Kong’s tourism numbers have continued to recover, but not as fast as desired by the government.

Official statistics showed 26.78 million visitors came to Hong Kong in the first 10 months of 2023, and the Tourism Board said it expected the full-year total would rise to 30 million. However, numbers are expected to be less than half of the record 65 million tourists the city attracted in 2018.