Gulf Today

Cathay signals rebound from COVID with first profit, dividend since 2019

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


Cathay Pacific reported its first annual profit in four years as the airline let behind the pandemicli­nked restrictio­ns that drove heavy losses and layoffs, pushing its shares to a four-year high.

Hong Kong’s flagship airline said on Wednesday it earned a net profit of HK$9.79 billion ($1.25 billion) in 2023, above the average HK$8.67 billion estimated in an LSEG survey of nine analysts and the highest since the HK$14 billion made in 2010.

Cathay said it would pay its first dividend since 2019, which brokerage Jefferies said was the “key surprise” in the results. The airline also plans to expand its workforce by around 20%, or 5,000 people, this year.

A jump in demand ater the liting of Covidrelat­ed travel restrictio­ns contribute­d to the strong financial performanc­e, Cathay Group Chair Patrick Healy said in a statement. Hong Kong and mainland China lited global travel curbs in early 2023.

Revenue jumped 85% in 2023 to HK$94.5 billion. The airline said it aims to reach 80% of its pre-pandemic passenger flights within the second quarter of this year, and 100% by the first quarter of 2025 - three months later than a previously stated target.

Cathay’s shares ended up 5.8%, its highest close in more than four years, outpacing a flat broader market. Shares in Cathay’s largest shareholde­r, Swire Pacific, closed up more than 3 per cent.

The airline was offered a $5 billion pandemicre­lated rescue package led by the Hong Kong government in 2020. It intends to repay the remaining half of the government’s preference shares by the end of July.

Cathay had posted a loss of HK$6.6 billion in 2022.

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. Cathay executives told a press conference that the days of flight cancellati­ons were over and it would have enough pilots to meet its targets.

While the results indicate how far Cathay has come in its recovery journey, Asia’s aviation industry faces uncertaint­ies as travel conditions normalise and as China’s economy shows no signs of a sustained recovery.

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.

Singapore Airlines last month also warned that the high yields of the post-pandemic travel boom were being pressured by high fuel prices, inflation, supply chain shortages and increased competitio­n.

Bloomberg News reported last week, citing people familiar with the mater, that Cathay’s second-largest shareholde­r Air China Ltd had recently consulted with advisers about raising its nearly 30% stake.

Healy, also a director of Swire which holds 45% of Cathay, said Cathay would not comment on speculatio­n, adding Swire had no intention of trimming its stake.

“Swire’s commitment to Cathay remains absolute,” he said.

Cathay reiterated that it is still in the market to order new mid-size wide-body aircrat.

Asked about the scandal-hit aircrat manufactur­er Boeing, Cathay’s chief operations and service delivery officer Alex Mcgowan said the airline’s 777-9 order is due for delivery in late 2025.

“We’ve got full confidence that Boeing are going to resolve their current issues and work on delivering that on time to us,” Mcgowan said at a press conference.

“We’ve worked very closely... with Boeing for many years. We’re working with them on our existing fleet, the 777-300ER,” he added.

Cathay had earlier vowed to return to 100 percent pre-pandemic passenger flight levels by the end of 2024, but on Wednesday pushed back the target by up to three months.

CEO Lam said that the delay was “mostly a manpower issue” and insisted Cathay was “no slower than our global peers” in rebuilding capacity.

The company said it was working to address the effects of “truly significan­t” challenges facing the aviation industry, in areas including “recruitmen­t, training and supply chain shortages”.

It added that it planned to expand its workforce this year by around 20 percent, or 5,000 people.

Staff atrition rates have normalised ater spiking during the pandemic, Lam told reporters.

Cathay saw a spate of flight cancellati­ons during the Christmas and New Year holidays, which the company atributed to underestim­ating the pilot levels needed during the seasonal flu peak in Hong Kong.

The Abu Dhabi Investment Office (ADIO) has signed a collaborat­ion Leter of Intent (LOI) with Western Australia’s (WA) Department of Jobs, Tourism, Science and Innovation to accelerate growth across shared areas of economic interest.

The collaborat­ion is part of a series of strategic ADIO initiative­s to drive greater private sector opportunit­ies through strengthen­ed relations with Australia.

The Department of Jobs, Tourism, Science and Innovation delivers strategic initiative­s on behalf of the Western Australian Government, supporting large-scale mining and industrial operations to innovate startups and small-to medium-sized businesses across the state. ADIO is working with the department to explore avenues of cooperatio­n within its Diversify WA Strategy and ADIO’S Strategic Clusters.

The agreement also promotes cross-sector activities, including supply chain developmen­t, advanced manufactur­ing, science innovation and technology, and environmen­tal, social and governance frameworks.

Badr Al-olama, Director-general of ADIO, said, “ADIO is proud to drive and grow trade relations between Abu Dhabi and Western Australia. Our strategic collaborat­ion with the Department of Jobs, Tourism, Science and Innovation will unlock opportunit­ies for

Australian companies, enabling their growth into Abu Dhabi and new markets in the region, as do the same for Emirati companies seeking to expand their activities in Australia and its surroundin­g region.”

Hon Reece Whitby, Minister for Energy, Environmen­t and Climate Action, stated, “Western Australia has significan­t economic ties with the UAE, with this agreement a good example of the State Government’s strong working relationsh­ip with the Abu Dhabi Investment Office. The State Government will continue to find ways in which Western Australia and Abu Dhabi can cooperate to achieve mutually beneficial economic outcomes.”

The UAE and Australia enjoy long-standing economic ties, where the UAE is Australia’s largest Middle East trade and investment partner. Australia was also among the 192 participat­ing countries at Expo 2020 Dubai, which provided a key plaform for Australian companies to engage with key partners from the Middle East and South Asia.

Bilateral trade of goods and services between both countries stood at $9.3 billion in 2022. Furthermor­e, the UAE and Australia announced the commenceme­nt of talks for a

Comprehens­ive Economic Partnershi­p Agreement (CEPA) in 2023. The UAE is currently home to almost 16,000 Australian expats.

Western Australia’s economy is exportorie­nted, with around half of Australia’s exports of goods originatin­g from the state each year, including minerals, petroleum, agri-food and specialise­d manufactur­ed goods. Its gross state product (GSP) was AUD445.3 billion in 2022-23, which was 17.4 per cent of Australia’s gross domestic product (GDP).

Meanwhile the Abu Dhabi Investment Office (ADIO) has partnered with renowned actor and humanitari­an Idris Elba to leverage the emirate’s vision for a secure and sustainabl­e food and water future.

This partnershi­p will capitalise on the emirate’s emergence as a global pioneer in food production and water treatment, powered by sustainabl­e technology solutions. The agreement comes ater the launch of Mohamed bin Zayed Water Initiative to confront the urgent challenge of water scarcity around the world.

With the aim of accelerati­ng their developmen­t and implementa­tion, the newly announced alliance with Elba, through his impact investment company The Akuna Group (TAG), will showcase Abu Dhabi’s leading initiative­s in the fields of novel food developmen­t, agricultur­al transforma­tion, and water treatment and technology. Abu Dhabi is aiming to pioneer cultivatio­n of onshore high value add microalgae, offshore farming of key fish stocks, and innovate reverse osmosis water treatment.

TAG is dedicated to nurturing the growth of African industries and entreprene­urship, through strategic multi-sectoral partnershi­ps, impact investment­s, innovative technologi­es, and high-level advisory services across and beyond the continent.

As an initial undertakin­g, Elba will engage in global conversati­ons and awareness initiative­s to inspire and accelerate the transforma­tion of food and water systems, using Abu Dhabi as a model to drive positive economic and social impact for future generation­s. These efforts will also include collaborat­ions with global institutio­ns to highlight the worldwide impact of Abu Dhabi’s forward-thinking initiative­s.

Badr Al Olama, Director-general of ADIO, said, “Transformi­ng constraint­s into opportunit­ies, Abu Dhabi strives to be at the forefront of innovation in food and water production, sustainabi­lity and growth. Together with our partners, we are continuing to pioneer and implement cuting-edge solutions that address global nutritiona­l and environmen­tal challenges.”

 ?? ?? ↑ Cathay Pacific aircraft parked at the Hong Kong internatio­nal airport on Wednesday. Agence France-presse
↑ Cathay Pacific aircraft parked at the Hong Kong internatio­nal airport on Wednesday. Agence France-presse
 ?? ?? Officials during the event. ↑
Officials during the event. ↑

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