In a move that could be considered audacious or perhaps desperate, Cathay Pacific has announced its decision to combat dropping profits by purchasing more planes. Yes, you heard that right. When faced with a 15% profit drop, the airline's solution is to invest in 30 Airbus A330-900 aircraft, with an option to buy another 30. Because nothing says "financial stability" like adding more debt to the balance sheet.
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The purchase, which is part of a broader HK$100 billion investment plan, is intended to modernize Cathay's fleet and expand its operations on high-capacity regional routes. According to Cathay Group Chief Executive Officer Ronald Lam, these new aircraft will enable the airline to elevate its customer experience and towards its goal of net-zero carbon emissions by 2050. However, one can't help but wonder if this decision is more about keeping up appearances and less about actual financial responsibility.
To put this into perspective, Pacific reported an attributable profit of HK$3.8 billion in the first half of the year, down from HK$4.8 billion in the same period last year. The airline attributes this decline to the normalization of ticket prices, which is a fancy way of saying they're not making as much money as they used to.
In the midst of this financial turmoil, Cathay Pacific has decided to double down on its investment in new aircraft. The first delivery is expected by the end of 2031, which means the airline will be paying for these planes long before they start generating any revenue. It's a bold strategy, Cotton. Let's see if it pays off for them. In conclusion, Cathay Pacific's decision to buy more planes in the face of declining profits is a risky move that could either pay off in the long run or lead to even greater financial troubles. Only time will tell if this gamble will be the solution to their problems or just another example of corporate hubris.