Cathay half-year profits rise despite almost doubling of jet fuel costs

Cathay Group was able to almost raise profits in the first half of the year despite facing an almost doubling in fuel costs due to the Middle East conflict.

 

The parent of Hong Kong-based Cathay Pacific and HK Express reported an attributable profit of HK$6.2 billion (£587.5 million), compared with HK$3.7 billion (£350 million) in the first six months of last year.

 

Hailing the strong financial performance, group chairman Guy Bradley said: ​“Having got off to a strong start in the first quarter, we faced a more challenging second quarter due to the situation in the Middle East and the resulting significant increase in jet fuel prices.

 

“This resulted in our jet fuel costs almost doubling from the first quarter to the second quarter.

 

“That we were able to achieve our first-half performance despite these circumstances is testament to the resilience we have built into our business in recent years.” 

 

Passenger revenue at Cathay Pacific rose by more than a quarter to HK$43 billion (£4 billion) as carryings grew by 17.5% year on year to 16 million.

 

Additional flights and capacity were mounted to Europe in March and April to cater for an upsurge in market demand as passengers prioritised alternative routings following the temporary suspension of services to Dubai and Riyadh.

 

The performance of European routes was boosted by changes in traffic flows due to the Middle East situation during the first half, particularly on itineraries connecting Europe and Oceania via Hong Kong.

 

Bradley said: “The increase in revenue was driven by ongoing strong underlying travel demand, amplified by increased transit traffic through Hong Kong as travellers looked to other hubs due to the Middle East situation in the second quarter.

 

“We leveraged our network to strengthen Hong Kong International Airport’s hub status, carrying more transit passengers, bringing more people to Hong Kong to support our economy, and generating more sales from overseas markets.”  

 

Regional arm HK Express trimmed losses from HK$524 million (£49 million) to HK$73 million (£7 million) “putting it on the path towards a turnaround in performance”.

 

However, its performance was affected by the significant increase in jet fuel prices in the second quarter, the group noted.

 

Bradley said: “Looking ahead, summer travel demand going into the third quarter is looking strong.

 

“We remain cautiously optimistic for the rest of the year, subject to developments in the Middle East situation and other macroeconomic factors.

 

“We remain on track to reach our 2026 passenger capacity growth target of around 10% as a group.

 

“While jet fuel prices have come down from their peak in the second quarter, recently they have been increasing again due to the escalation of tensions in the Middle East.

 

“We expect the impact of elevated fuel prices will continue for the rest of the year and we remain alert to the changing geopolitical and market situation.”