Cathay Pacific posts first annual profit in four years

Cathay Pacific employees work at Hong Kong International Airport, in Hong Kong, China March 8, 2023. REUTERS/Lam Yik/file photo

HONG KONG  — Cathay Pacific posted its first annual profit since 2019 as it left behind the COVID-19 period distress that drove heavy losses and layoffs at the airline, sending its shares surging to a four-year high.

Hong Kong’s flagship airline announced on Wednesday it made a HK$9.79 billion ($1.25 billion) net profit in 2023, and said it plans to expand its workforce by around 20 percent, or 5,000 people, this year.

Cathay will pay it first dividend to ordinary shareholders since 2019, it said.

A jump in demand after the lifting of COVID-related travel restrictions contributed to the strong financial performance, Cathay Group Chair Patrick Healy said in a statement. Hong Kong and mainland China lifted international travel restrictions in early 2023.

Revenue rose 85 percent in 2023 to HK$94.5 billion.

Cathay’s stock price soared more than 6 percent after the results to its highest level since February 2020, outpacing a 0.6% rise for the benchmark Hong Kong index.

READ: Cathay Pacific to cut workforce by nearly a quarter

The airline had received a $5 billion pandemic-related rescue package led by the Hong Kong government in 2020 and posted a loss of HK$6.6 billion in 2022.

Full recovery in Q1 2025

Cathay said it aims to reach 80 percent of its pre-pandemic passenger flights within the second quarter of this year, and 100 percent within the first quarter of 2025 – three months later than a previously stated target.

The carrier has restored capacity more slowly than its closest rival, Singapore Airlines, because it faced tighter quarantine rules for longer, and needed to hire more staff to bring back services.

A shortage of staff led the airline to cancel and reduce flights.

READ: Cathay Pacific faces ‘unprecedented’ staffing shortages that will keep fares high -union

A global imbalance between supply of flights and travel demand last year drove up ticket prices and airline yields.

“We expect this imbalance to diminish and yields to continue to normalise throughout 2024 as airlines around the world continue to add capacity,” Cathay CEO Ronald Lam said.

The airline reiterated that it is still in the market to order new mid-size wide-body aircraft.

Cathay Pacific is a full service passenger and cargo airline, with two subsidiaries: low cost carrier HK Express and cargo carrier Air Hong Kong.

($1 = 7.8243 Hong Kong dollars)