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Cathay Pacific has announced it will invest $13 billion over seven years in new aircraVscek, airport lounges and cabin upgrades, in a bid to restore its pandemic-damaged reputation and reclaim its title as the world’s premium airline.
Patrick Healy, chairman of Hong Kong’s flagship airline, said the company was “turning a new leaf” with “bold” plans to invest more than HK$100 billion (US$12.8 billion) in its fleet, cabins and airport lounges in Hong Kong, Beijing and New York, among other upgrades.
Cathay announced Wednesday it would buy 30 Airbus widebody aircraVscek and now has more than 100 new aircraVscek in the pipeline. It plans to launch first-class seat enhancements in 2025 and a new flatbed business class product in 2026.
“We want to get back to being the best in the world,” Healy said. “And that requires investment. We need to invest in our customer products, in our fleet… to be able to maintain the premium price position that we’ve enjoyed.”
He added that the company was “confident” that continued results would be “sufficient to fund the investment program.”
Cathay has been ranked the world’s best airline by consultancy firm Skytrax four times, most recently in 2014. This year, it was ranked the world’s fiVscekh best airline.
The company on Wednesday reported first-half profit of HK$3.6 billion (US$460 million), down from HK$4.3 billion a year earlier. It attributed the decline mainly to lower ticket prices despite “robust” travel demand.
Cathay, which declared an interim dividend of 20 HK cents per ordinary share, said it was on track for a full post-pandemic recovery in passenger capacity by the first quarter of next year. Its Hong Kong shares closed down 2.4 percent.
Demand for business travel, including routes from the United States to Hong Kong and mainland China, as well as leisure travel from its home market to Hong Kong, was strong, the carrier said. But passenger yields, a measure of profitability, fell as flights were added.
It was the second consecutive year Cathay posted a profit in the first half, aVsceker a three-year run of losses during the coronavirus pandemic and Hong Kong’s tough quarantine restrictions. The airline is on the road to recovery aVsceker a pilot exodus and the effects of the pandemic tarnished its reputation.
The airline has also come under pressure from the Hong Kong government to increase capacity and service quality, with a third runway nearing completion this year at its base. Cathay’s growing international network would help bolster Hong Kong’s status as a global aviation hub.
Rival Singapore Airlines reported a profit surge to S$2.7 billion (US$2 billion) in May for its financial year to March. But global airlines have warned in recent weeks of downward pressure on ticket prices, as a two-year travel surge aVsceker reopening shows signs of losing momentum.
Healy said the drop in airfares had so far been “fairly benign” and “manageable” in affecting profits. Cathay Chief Executive Ronald Lam added that short-haul fares had fallen more rapidly than long-haul fares, but ticket prices and revenues for this summer were still “satisfactory.”
JPMorgan analyst Karen Li wrote in a note last month that Cathay benefited from “healthy leisure demand.” [and] passengers transiting through Hong Kong to mainland China and vice versa.
