【293 Performance】Cathay Pacific: March fuel prices doubled, announces additional fuel surcharge; full-year profit up 10%, second interim dividend increased by 31% to 64 cents; Hong Kong Express losses widened

Cathay Pacific (00293)
Announces that 2025 revenue will increase 12% year-on-year to HKD 116.77 billion, with profit rising 10% to HKD 10.83 billion; second interim dividend of HKD 0.64 per ordinary share, up 31% annually, and per-share dividend increased 22% to HKD 0.84, with marginal profit margin down 0.2 percentage points to 9.3%. Cathay’s stock price rose 4.4% after earnings release, closing at HKD 13.17, with a current dividend yield of about 6.4%.

Table of Contents

• Cathay takes delivery of 8 new narrow-body aircraft this year, aiming for a 10% increase in passenger capacity
• Cathay’s profit growth accelerates in the second half of 2025
• Cathay Express’s net loss before expenses and taxes nearly quadruples in 2025

The ongoing Middle East conflict has caused a sharp rise in international oil prices. Cathay CEO Augustus Tang told investors and at the earnings presentation that Cathay’s Middle East flights are limited, mainly affecting fuel prices, especially in March when jet fuel prices nearly doubled compared to the first two months. The group will soon announce adjustments to fuel surcharges. This year, the group’s fuel hedging has reached 30%, and will continue to hedge according to existing mechanisms, unaffected by the current situation.

Cathay has announced the cancellation of flights to Dubai and Riyadh until March 31. Tang said they will review the situation then to see if flights can resume, and currently have shifted related capacity to other routes. Many travelers previously transferred through the Middle East to Asia, but now there is increased transfer traffic via Hong Kong, leading to a short-term rise in demand for flights between Hong Kong and Europe. Cathay has added more European flights.

Chief Commercial Officer Cecilia Liu said that bookings on European routes are already quite high, and when additional demand arises, ticket prices will naturally rise. The group has increased capacity for flights to London and Zurich since March.

When asked if ticket prices will stay high, she emphasized that prices are determined by supply and demand. Over the past two years, global travel demand has been steady, and Cathay’s capacity has returned to pre-pandemic levels. Last year, the airline added 20 new destinations, offering more options to passengers. Ticket prices depend on the balance between supply and demand.

For the full year 2025, Cathay’s basic earnings per share (EPS) are expected to grow 11% to HKD 1.655, diluted EPS up 22% to HKD 1.618, and dividend per share up 22% to HKD 0.84. Marginal profit margin is expected to decline 0.2 percentage points to 9.3%.

Tang said that at the beginning of 2025, after fully rebuilding the flight network, the group will operate services to 20 destinations, covering over 100 global passenger routes. The team continues to expand, and by the end of 2025, employee numbers will exceed 33,000.

How much will Cathay employees receive in annual bonuses? See [Next Page]

▲ Cathay 2025 performance data.

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Cathay takes delivery of 8 new narrow-body aircraft this year, aiming for a 10% increase in passenger capacity

Tang said that after reaching new highs in recent years, recruitment and training are now stable and aligned with growth plans. Cathay will receive 8 new narrow-body aircraft in 2026, expecting about 10% growth in passenger capacity.

Regarding Hong Kong Express, Cathay adopts a long-term perspective, expecting to continue expanding and improving efficiency based on a low-cost carrier business model over the coming years, moving toward sustainable profitability. The airline has implemented several measures to enhance resilience and has already seen positive results, with an encouraging start in the first two months of 2026.

For Cathay Airways, the focus will be on increasing flight frequencies on existing routes and adding new destinations such as Seattle, launching at the end of March. By year-end, a new business class product—Yuyi Business Class (with direct access) and a brand-new economy class—will be introduced on the Airbus A330-300 regional fleet. Subsequently, the Boeing 777-9, equipped with a new global first-class experience, will enter service in 2027.

Cathay also plans to reduce economy class seats on the Airbus A321neo narrow-body aircraft, providing more spacious seats to enhance passenger comfort and deliver the most enjoyable flying experience. On the ground, the flagship Hong Kong Premium Lounge—Global Lounge First Class—will reopen after a comprehensive redesign. Later this year, Cathay’s first lounge in New York will open.

For Cathay Cargo, the first two months of 2026 have shown a steady start.

Cathay’s profit growth accelerates in the second half of 2025

In the first half of 2025, Cathay Airlines reported a 1% increase in profit. The full-year results show that profit growth accelerated in the second half, with a 14% increase to HKD 7.18 billion in the second half. For the full year, Cathay’s attributable profit from associates is expected to rise 60% to HKD 530 million.

Excluding associate companies and impairment charges, Cathay and its subsidiaries’ recurring profit is projected to grow 13% year-on-year to about HKD 10 billion, with second-half performance up 23% to HKD 6.16 billion.

During the year, the passenger yield reflecting Cathay’s ticket pricing fell 10% to HKD 60.4 cents, and cargo yield declined about 5% to HKD 2.69.

On the financial side, Cathay’s net debt decreased 19% year-on-year to HKD 46.81 billion, with unrestricted cash and equivalents up 33% to HKD 25.44 billion. The debt-to-equity ratio is 1.1 times, down 0.32 times from last year.

Hong Kong Express’s net loss before expenses and taxes nearly quadruples in 2025

Cathay also noted that its wholly owned subsidiary Hong Kong Express’s passenger revenue grew 6.7% year-on-year to HKD 6.39 billion in 2025. The airline recorded a pre-tax, pre-expenses net loss of about HKD 1 billion, a 3.9-fold increase from the previous year. Factors affecting profitability include short-term impacts from changing travel preferences, the opening of several new routes (which require time to mature), and ongoing issues with the Pratt & Whitney engines on some aircraft, which have yet to be resolved.

Tang said that because Hong Kong Express relies heavily on Japan routes, it was significantly affected last year by rumors of earthquakes in Japan, but those issues have now passed, and Japan routes have returned to normal. The first two months of performance this year have improved significantly, and the airline expects continued progress, though it is difficult to predict when breakeven will be achieved. He only hopes to reach it as soon as possible, noting that various fundamental factors are improving.

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