Cathay Pacific posted a 1% increase in annual profit, reporting HK$9.89 billion ($1.27 billion) for the year ending December 31, 2024. The airline exceeded market expectations of HK$8.49 billion, driven by strong cargo demand, higher passenger numbers, lower fuel costs, and improved operational efficiency. However, despite this profit growth, competition among airlines led to lower airfares across the region.
Passenger yields dropped globally as airlines resumed operations after pandemic-related restrictions. Cathay Pacific experienced a 12% decline in annual yield, while HK Express, its fully owned low-cost carrier, recorded a 23% drop. CEO Ronald Lam stated that this trend was anticipated. “The group had added around 30% more passenger capacity this year,” he said, highlighting efforts to restore pre-pandemic operations.
Competition and Operational Challenges
HK Express reported a HK$400 million loss for the year, reversing its HK$433 million profit from the previous year. The airline attributed the decline to lower fares caused by intense competition in regional routes. Additionally, technical issues with Pratt & Whitney engines on its Airbus A320neo aircraft led to flight disruptions in 2024, affecting its operations.
Hong Kong and mainland China reopened later than other regions, and full international capacity has not yet been restored. Despite regional fares stabilizing, long-haul ticket prices may continue to decrease, according to CFO Rebecca Sharpe.
Cathay Pacific’s stock initially surged nearly 4%, reaching its highest level since May 2019, before closing 1.8% lower following the earnings announcement.
Cargo Growth and Airspace Adjustments
Cargo operations remained strong as e-commerce shipments from China continued to increase. Cargo yields rose by 3%, but Cathay Pacific warned that potential trade tensions worldwide could affect future freight performance. “The cargo outlook is very uncertain,” Lam said, though the airline has yet to see a major impact.
The airline also addressed international airspace concerns. While many airlines from the United States and the European Union avoid Russian airspace due to the Russia-Ukraine conflict, Cathay Pacific continues to fly over Russia for certain North American routes but avoids it for European flights. Lam stated that the airline may reconsider its routes if global conditions change.
Revenue Growth and Expansion Plans
After three years of losses during the pandemic, Cathay Pacific recorded a second consecutive year of profit. Annual revenue grew 10.5%, reaching HK$104.37 billion, in line with market expectations. Sharpe noted that revenue had surpassed HK$100 billion for the first time since 2019.
Cathay Pacific has now shifted its focus to expansion. Following a phase of rebuilding and re-hiring in 2023 and 2024, the airline has committed to investing HK$100 billion over the next seven years, primarily in acquiring new aircraft. As part of this investment, it expects to receive its first Boeing 777X widebody jet in early 2027.
This expansion aligns with Hong Kong International Airport’s newly opened three-runway system, which became operational in November 2024, boosting overall capacity.
Cathay Pacific’s profit also included a one-time gain of HK$578 million, resulting from a dilution of its stake in both Air China and Air China Cargo. Additionally, the company declared a second interim dividend of HK$0.49 per share, exceeding market expectations of HK$0.42 per share.
Cathay Pacific remains focused on expanding its network and maintaining profitability. While competition and global uncertainties persist, the airline continues to rebuild and invest in long-term growth.
