Hong Kong's Cathay posts 1.1% rise in first-half net profit, orders new planes

The Star

a day ago

Cathay Pacific Airways has reported a 1.1 per cent year-on-year rise in net profit to HK$3.65 billion (US$465 million) for the first six months of 2025 thanks to a resilient cargo business, and plans to order another 14 new aircraft.
Hong Kong's flag carrier announced on Wednesday that it would buy 14 Boeing 777-9 jets as part of an agreement made in 2013 with the US-based manufacturer, under which it earlier ordered 21 aircraft of the same model scheduled for delivery in 2027 or later.
Cathay Group also secured the rights to acquire up to seven more Boeing 777-9 aircraft.
The list price for the 14 aircraft is at least HK$63.2 billion but Cathay said it had received concessions from Boeing and the bill would be lower than that.
The jets are expected to be delivered by 2034 and the carrier intends to finance the purchase through commercial bank loans, company cash and other methods.
Cathay also said that the new fuel-friendly jets would replace some of its existing long-haul widebody aircraft and serve long-haul and selected regional destinations.
Group chairman Patrick Healy said that the deal would bring the total number of Boeing 777-9 aircraft ordered to 35 and boost the group's overall investments to more than HK$100 billion over the coming years.
'Over the past few years, we have embarked on an all-encompassing fleet renewal and expansion plan, which includes orders for over 100 new narrowbody, regional widebody, long-haul widebody and large freighter aircraft,' he said.
'The new order brings our total investment to well over HK$100 billion, which also includes new cabin products, lounges and digital innovation, further strengthening the Hong Kong international aviation hub and elevating the customer experience to new heights.'
The carrier announced in 2024 that it would roll out a major investment initiative, committing more than HK$100 billion over seven years and covering the purchase of 100 aircraft.
On the purchase of Boeing jets, Healy said Cathay had a strong relationship with both the US manufacturer and European firm Airbus going back decades and that the company had confidence in both of its key airframe suppliers.
Chief operations and service delivery officer Alex McGowan acknowledged that Boeing had experienced a troubled period in recent years. But he said Cathay was very 'encouraged by the renewed focus that Boeing leadership has on engineering and production quality', as well as restarting its certification flight tests.
As to calls by Airport Authority CEO Vivian Cheung for Cathay to double its passenger numbers to cater to the added capacity of Hong Kong International Airport, Healy only said that the company was going all out to support the airport's development.
He added that the robust, sustainable financial growth was thanks to strong passenger traffic and lower fuel prices.
'Our first-half result was driven by higher passenger volumes, albeit with lower yields, a consistent cargo performance, and lower fuel prices compared with the same period in 2024,' he said, announcing that the first interim dividend remained the same at 20 HK cents a share.
The group also posted a 9.5 per cent increase in revenue, reaching HK$54.3 billion compared with HK$49.6 billion in the same period last year.
Cathay's budget arm, HK Express, saw its loss before net finance charges and taxation widen to HK$524 million in the first half, up from HK$73 million in the same period last year.
The group said it felt the impact of earthquake rumours related to Japan, which drove passengers away from the country, its core market. It added that new routes took time to generate contributions.
Cathay Pacific CEO Ronald Lam Siu-por said the company was still confident about the budget airline's future as the challenges were only short-term.
'When we look at HK Express, its fundamentals are very strong and keep improving. And that gives us confidence about its long-term future,' he said.
'And we believe that, given time, many of these routes will come to be profitable as the months go by.'
Cathay alone carried 13.6 million passengers in the first half of the year, a 27.8 per cent year-on-year jump from 10.66 million.
The carrier's passenger revenue jumped 9.5 per cent to HK$54.3 billion in the first half year on year.
The group in June announced it had hit 100 destinations after a two-year rebuilding journey following the devastation of the Covid-19 pandemic.
But Cathay's staff costs rose 19.8 per cent to HK$7.44 billion, accounting for 18.4 per cent of operating expenses. Staffing is the airline's second-largest expense after fuel.
Cargo revenue increased 2.2 per cent to HK$11.1 billion compared with the first half of 2024, with the company saying its cargo business demonstrated resilience despite tariff risks amid geopolitical tensions and the trade conflict between the United States and China.
Cathay said it managed to leverage its global network and redeploy capacity to take advantage of areas where markets were still strong.
So far, the group has hired more than 3,700 pilots, still below the pre-pandemic number of 3,800.
In March, the company reported 1 per cent growth in profit to HK$9.9 billion in 2024 compared with a year earlier, marking its second consecutive year of robust performance driven by stronger cargo and passenger demand, lower fuel prices and higher cost efficiencies.
The group's share price dropped 9.66 per cent to HK$10.85 on Wednesday after the financial results and the aircraft deal were announced. The benchmark Hang Seng Index rose 0.03 per cent.