Cathay Pacific expects a return to profitability in the current half-year period, boosted by steady recovery in cashflow and network capacity.
The Hong Kong-based airline predicted it will achieve a consolidated profit at group level for the first half of 2023. This would be an improvement from last year, when it recorded losses in both halves.
Cathay’s results will be boosted by a one-off cash gain of HK$1.9 billion ($242.7 million) in the first half, after reducing its stake in Air China from 18.13% to 16.26%. However, it will also factor in potential losses from its associate companies, which are reported three months in arrears. The carrier has been cashflow positive so far in 2023, with further improvement from 2022, which was also cashflow-positive.
Cathay’s operating performance for May showed a dramatic rebound from the same month last year, with capacity up 1,152% year-on-year and passenger load factor up by 24.7 percentage points to 85.1%. The airline’s capacity, as measured in available seat kilometers, was about half the level of the same month in 2019. The 2019 figures include Cathay Dragon, which has now been shut down and many of its routes taken over by the Cathay parent.
Passenger demand in May eased following the Easter holiday peak but picked up again over the Buddha’s Birthday holiday weekend late in the month. Travel to Japan and Thailand was particularly strong, Cathay said.
Cathay described transit traffic trends in May as “encouraging,” with healthy demand for travel between Mainland China and other markets. The upcoming peak summer period also looks promising, Cathay said.
Cargo load factor in May was down 14.2 points year-on-year to 61.5%. Cargo capacity increased by 113.6% as more passenger belly capacity returned. Cathay said the summer months are typically slower for cargo, and “any significant pickup in demand is not expected until the end of the third quarter.” The airline also expects heightened competition in the cargo market as demand is outpaced by supply.
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