Cathay emerges from financial turbulence
Not so long ago Cathay Pacific Airways was still climbing out of a dark financial cloud that enveloped it during the Covid years. This week the airline reported its second consecutive annual profit of nearly HK$10 billion, compared with a loss of HK$6 billion-plus in 2022. As a result Cathay has been able to buy back shares, warrants and bonds issued in a government-led bailout of unsustainable debt arising from the pandemic, and set about consolidating its claim to be rated one of the world's top airlines.
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Net profit rose only 1 per cent to HK$9.9 billion last year as fares fell from abnormally high levels. But, amid headwinds including intense post-pandemic competition for business and geopolitical tension, this represented a robust performance driven by stronger cargo and passenger demand, lower fuel prices and higher cost efficiencies. Cargo played a leading role as e-commerce drove growth. Should rising trade frictions cloud the freight business with uncertainty, operational flexibility will be key.
'Our focus is now firmly on the future as we continue to do our part to elevate Hong Kong's status as a world-leading international aviation hub,' said Cathay Group chairman Patrick Healy.
The turnaround has given the group confidence to buy 30 Airbus aircraft on top of 70 previously ordered as part of a HK$100 billion investment drive over a period of seven years, taking the total to 150, including purchase options.
Maintenance of aviation hub status is expected of the government under the Basic Law. Investment of HK$141 billion in a third runway is testament to that. As the city's flag carrier, Cathay and its budget carrier Hong Kong Express have a key role to play.
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Cathay can best contribute by continuing to grow its passenger and cargo business and developing underlying strength and contingency plans, in the hope of avoiding reliance on taxpayers to weather future shocks. This would show that Cathay is up to the challenge of rising expectations. Interestingly, while it has returned to pre-pandemic capacity it has still not restored all routes. As it does so it could face issues of quality of service. How it resolves them will be paramount to laying claim to be one of the world's very best airlines.
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