Cathay Pacific Airways (0293) H1 2024 earnings summary

Executive summary

• Achieved a profitable first half of 2024 with attributable profit of HK$3,613 million, despite a 15.3% year-over-year decline due to yield normalization, and revenue up 13.8% to HK$49.6 billion driven by strong travel and cargo demand.

• Passenger flights reached 80% of pre-pandemic levels in Q2 2024, with over 10 million passengers carried in H1 2024, and all parked aircraft returned to service.

• Completed the buyback and full redemption of all government preference shares totaling HK$19.5 billion, with HK$2.44 billion paid in dividends on these shares.

• Announced a HK$100 billion investment plan over seven years for fleet, product, and lounge upgrades, including new-generation aircraft orders and sustainability initiatives.

• Interim dividend of HK$0.20 per ordinary share declared, the first since 2019, to be paid in October 2024.

Financial highlights

• Revenue rose 13.8% year-over-year to HK$49.6 billion; passenger revenue up 20%, cargo revenue up 1.5%.

• Group attributable profit for H1 2024 was HK$3.6 billion, down from HK$4.3 billion in H1 2023, mainly due to yield normalization.

• Available unrestricted liquidity increased to HK$25.4 billion as of June 2024, supporting the preference share buyback.

• Unit cost per ATK (excluding fuel and tax) decreased to HK$2.32, with cost per ATK (with fuel) up 1.8% to HK$3.41.

• Profit margin decreased to 7.3% from 9.8% a year ago; basic EPS at 52.4 HK cents.

Outlook and guidance

• On track to restore 100% of pre-pandemic flights by Q1 2025, targeting 100 destinations and headcount of 29,000 by year-end.

• Anticipate continued strong cargo demand in H2 2024, especially during the peak season.

• Committed to over HK$100 billion in investments over the next seven years, including sustainability targets of 10% SAF use by 2030 and net zero by 2050.

• Plan to maintain liquidity at pre-pandemic levels and a dividend policy targeting approximately 50% payout of profit after tax.

• Expect further normalization of long-haul yields in H2 2024.