Cathay Pacific Airways, a Hong Kong-based airline, recently reported its best first-half profit in more than a decade. The company announced plans to order more planes and repay a Hong Kong government rescue package after a significant turnaround in travel demand.
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The interim net profit of HK$4.3 billion (S$740 million) was in line with its guidance for earnings of up to HK$4.5 billion¹. This compares with a HK$5 billion loss a year earlier when Hong Kong’s strict quarantine rules were in place. Cathay has recovered capacity more slowly than Singapore Airlines because it faced tighter quarantine rules for longer.
Cathay said it intended to exercise purchase rights to buy 32 Airbus A320neo family aircraft, looking to add to its fleet as demand rebounds¹. It will also buy back 50 percent of the HK$19.5 billion of preference shares held by the Hong Kong government by the end of 2023, and the remainder by the end of July 2024, subject to the completion of a proposed capital reduction and business conditions at the time.
Cathay issued the shares in 2020 as part of a HK$39 billion rescue package from the government and its most significant shareholders, Swire Pacific and Air China, that shored up its finances after travel demand collapsed during the pandemic. This is excellent news for Cathay Pacific Airways and shows that the company is on the right track towards recovery.