Cathay Pacific sees first HY profit in 3 years on travel rebound

(Reuters) -Hong Kong’s Cathay Pacific Airways (OTC:) on Friday forecast its first half-year profit in three years, buoyed by a strong rebound in travel demand and one-off gain from a stake sale in Air China (OTC:).

The city’s flagship carrier had posted record losses for the last three years as it parked much of its fleet during the pandemic due to a lack of demand amid COVID-related flight cancellations and drastic headcount cuts owing to restrictions.

That is turning around on the back of a meteoric jump in travel amid “considerable demand” to and from Mainland China, while high ticket prices and an increase in the frequency of flights to popular destinations also support the recovery.

In the first five months of this year, Cathay Pacific carried about 6.3 million passengers, compared with a meagre figure of about 185,000 last year.

Shares of the carrier were trading 0.5% lower, as of 0222 GMT, while the Composite Index was down 1.6%.

Airlines around the world are benefiting from this rebound in travel which has far exceeded their expectations, prompting carriers to scale up their fleet, improve flight frequencies, and add new destinations.

“The Cathay Group has seen a strong rebound in the performance of our airlines (and) our cash flow has continued to improve,” the airline said in a statement, adding that the group had been operating cash-generative so far in 2023.

Based on Refinitiv Eikon estimates, Cathay Pacific is expected to record an annual profit of HK$3.44 billion this year, compared with a loss attributable of HK$7.16 billion last year.

An estimated HK$1.90 billion ($242.64 million) one-off gain from the near 1.9% stake sale in Air China is also expected to benefit the bottom line in the first half, the airline said.

($1 = 7.8305 Hong Kong dollars)