By Kimberley Kao
Cathay Pacific Airways is set to buy Airbus jets valued at US$11 billion, the Hong Kong flag carrier said as it posted a drop in first-half profit in part due to lower ticket prices.
The airline on Wednesday said net profit in the first six months fell 15% on the year to 3.61 billion Hong Kong dollars, equivalent to US$463.1 million. It attributed the fall to the "normalization of ticket prices."
Revenue rose 14% to HK$49.60 billion, helped by passenger flights reaching 80% of prepandemic levels, which also boosted cargo capacity, it said. Yield, or the revenue earned per passenger, declined by 11%, given that more passenger flights are being added to the market, it added.
Growth in operating expenses outpaced that of revenue. Non-fuel costs rose by 11% on the year, while fuel costs before the effects of hedging rose 27%.
Cathay also announced plans Wednesday to buy 30 Airbus A330-900 widebody aircraft for delivery by the end of 2031. The jets are valued at US$11 billion, it said, although buyers usually receive steep discounts in such deals. Cathay also has the option to buy another 30 jets.
Cathay, which currently operates a mixed fleet of more than 230 owned and leased Boeing and Airbus aircraft, said the new jets would help replace its existing fleet of mid-size widebody aircraft and initially mainly serve regional Asia destinations.
Shares of Cathay were last trading 2.1% lower, bucking the upward trend in Hong Kong's benchmark index and taking year-to-date losses to 3.8%.
Like many airlines, Cathay has been working to restore operations to prepandemic levels after enduring a multiyear downturn in travel demand. This year it brought out the last of its aircraft that it had stored in long-term parking in Australia after the onset of the pandemic, and last week it finished repaying a HK$19.5 billion investment the Hong Kong government made in 2020 to help keep the airline afloat during global groundings and border closures.
Cathay said Wednesday that it expects group passenger flights to fully recover to prepandemic levels by the first quarter of next year. It also announced an interim dividend of HK$0.20.
"Going forward, we will continue to maintain a lower level of liquidity than we did during the pandemic, reflecting our confidence in the global aviation industry," company Chair Patrick Healy said in a statement.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
August 07, 2024 03:45 ET (07:45 GMT)
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