Cathay Pacific Airways Limited

For first-half 2022, Cathay Pacific reported revenue of HK$18.6 billion, up 17% year over year. Attributable loss was HK$5 billion, improved from HK$7.6 billion in first-half 2021; the Cathay Pacific airline-only loss before associates/subsidiaries narrowed to HK$1.5 billion from HK$5 billion, and the loss for Cathay Pacific plus subsidiaries was HK$2.5 billion, about 60% better year over year. Available liquidity was HK$26.7 billion at June 30 versus HK$30.3 billion at December and HK$32.8 billion a year earlier, and gearing was 0.74. Passenger capacity averaged 4% of pre-pandemic levels, passengers carried more than doubled to 335,000, and cargo revenue increased 9.3% despite a 31% capacity reduction. For the rest of 2022, management said passenger capacity could reach 25% by year-end and cargo capacity 65% under current restrictions; they also said they expect to be cash generative going forward.

The lead strategic message was that recovery is getting closer, but only gradually because operating restrictions still limit how fast Cathay can rebuild. Management emphasized two prerequisites for recovery: bringing parked aircraft back into service and recruiting/retraining several thousand frontline employees, including about 4,000 for Cathay Pacific. The tone was cautiously optimistic, with repeated calls for a clearer government road map to fully remove quarantine restrictions for crew and passengers, while expressing strong confidence in Cathay’s long-term future and Hong Kong’s role as an international aviation hub.

Rebecca Sharpe focused on the quarter’s improving financial trajectory and liquidity discipline. She highlighted HK$18.6 billion of revenue, HK$5 billion attributable loss, HK$26.7 billion of liquidity, and gearing of 0.74, noting that cash generation turned positive late in the half. She also pointed out that there were no impairment or one-off adjustments in the period, that more than HK$4 billion of new financing was raised in the first half, and that the HK$7.8 billion government bridge loan remained undrawn but available, with the drawdown period extended to June 2023. On capital allocation, she said the deferred preference-share dividend reflects prudent cash management and will be paid when cash flow projections say it is affordable.

Analysts pressed on whether higher passenger capacity would pressure yields, and management said first-half yields were unusually elevated because of the special demand-supply setup, with second-half yield hard to predict and dependent on route mix. They also asked about parked aircraft, and management said bringing planes back will increase maintenance costs, varying by aircraft and check cycle. On fuel hedging, management said there is no plan to change policy because hedging is viewed as prudent, and on the deferred preference-share dividend, they said repayment timing depends on cash flow affordability rather than a fixed profitability trigger. Management also said cargo peak-season demand should still be strong in the second half, though not as exceptional as last year, and that forward passenger bookings improved after the government’s Monday announcement, with some bookings extending into Christmas and New Year.