Cathay Pacific Airways, Hong Kong’s flagship carrier, announced on Wednesday that it will invest over HK$100 billion ($12.83 billion) over the next seven years as it makes big strides in its recovery path after the COVID-19 pandemic.
The investment, which will be used in fleet, cabin products, lounges, a digital upgrade and sustainable development, aims to enhance the customer experience and strengthen Hong Kong’s international aviation hub status.
The airline will purchase 30 Airbus A330-900 aircraft, with the option to buy another 30 at a later date. Delivery of the aircraft is expected before the end of 2031. Coupled with an earlier order of 70 aircraft, the expansion will raise the total acquisitions of aircraft to over 100.
“As the local airline, we are a key contributor to the future success of the international aviation hub. Our substantial investments further demonstrate our unwavering commitment to fostering Hong Kong’s ongoing economic development,” Cathay Group Chairman Patrick Healy said.
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The group is “firmly turning the page and embarking on a bold new strategy for the future, not just in scope but also in quality”, he said on Wednesday.
The announcement came after the carrier reported a 15.3 percent yearly decline in net profits for the first six months to HK$3.6 billion.
Despite shrinking profits, Healy said the group’s 2024 midyear financial results were strong, “primarily driven by the ongoing robust demand for travel, and the solid performance of cargo business”.
Its revenues jumped 13.8 percent to HK$ 49.6 billion in the first half, compared with the same period of 2023.
The growth was underpinned by its passenger flight services, which saw its revenues surge 20 percent year-on-year to HK$30 billion.
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The airline carried 10.7 million passengers in the first half of 2024, an average of about 59,000 per day, which was 36.4 percent more than that recorded in the first half of 2023.
Passenger capacity has recovered to 80 percent of pre-pandemic levels within the second quarter, as the group had planned.
Company executives expect fares to continue normalizing for long-haul routes while noting flight prices in regional markets have stabilized following the COVID-19 pandemic.
“(Ticket prices) in regional markets have normalized due to competition, compared with the peak fares of last year,” said Chief Customer and Commercial Officer Lavinia Lau Hoi-zee said.
Routes to the United States and Canada remain the exception, with fares still relatively high, she said.
High demand for flights between Hong Kong and the US has continued as direct flights between the Chinese mainland and the US have been slow to resume.
The group says it will increase its flight frequency to the US East Coast, such as New York, and the West Coast, such as Los Angeles and San Francisco, with three flights per day to each destination.
Healy said: “Last year was an abnormal period for ticket prices by any historical comparison. This was driven by an extreme imbalance between supply and demand” in January and February after Hong Kong lifted border restrictions.
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However, he said prices are falling in line with expectations, describing it as “benign, manageable”, and he expressed confidence that the group will drive a positive financial result for the first half of 2024.
The company announced a first interim dividend payment to ordinary shareholders of HK$0.20 per ordinary share.
Its subsidiary HK Express reported a loss of HK$73 million for the first half of the year.
To achieve their goal of returning to full pre-pandemic capacity by early 2025, Cathay Pacific and HK Express are looking to hire 500 more pilots before the end of this year.
