Cathay Pacific lifts H1 profit outlook

Cathay Pacific (0293.HK) has forecast profit attributable of about HK$6.0 billion to HK$6.5 billion for the six months ended June 30, 2026. This compares with profit of about HK$3.7 billion in the same period a year earlier, marking a substantial year-on-year increase in interim earnings.

The company described the projected result as being supported by both passenger and cargo strength. The guidance positions the first half of 2026 as one of the airline’s strongest interim profit periods on record.

The profit outlook includes a one-time gain of about HK$1.4 billion arising from the partial dilution of Cathay’s stake in Air China. This non-recurring item provides a notable uplift to reported profit for the period.

While the one-off gain is material, Cathay’s trading update also pointed to improvements in underlying operations. Stronger demand in both travel and cargo contributed to the higher earnings guidance beyond the accounting impact of the stake dilution.

Traffic metrics showed broad-based growth in the first half of 2026. Passenger numbers rose about 12% in June year-on-year and increased roughly 17% over the first six months, indicating ongoing recovery and expansion in travel demand.

Cargo volumes also strengthened, with tonnage up 9% in June and 9% across the first half. This cargo performance added to the earnings momentum from the passenger business.

Cathay reported benefits from rerouted traffic linked to the Middle East conflict, which helped sustain load factors. Demand around the Dragon Boat Festival further supported volumes, particularly in premium cabins, underpinning revenue quality as well as headline growth.

The airline highlighted fuel as a significant challenge despite the positive demand backdrop. Industry projections from the International Air Transport Association point to jet fuel averaging about $152 a barrel this year and lifting the sector’s fuel bill to roughly $350 billion.

In response, Cathay has hedged roughly 30% of its jet fuel requirements. The group has also implemented fuel surcharges on both passengers and cargo, seeking to offset part of the cost increase through pricing measures.

Cathay’s low-cost arm HK Express has taken additional steps to manage fuel-related pressures by trimming capacity. As a result of these adjustments, HK Express saw its June passenger numbers fall by about 4%.

The capacity reductions at HK Express contrast with the broader growth trend across the group. Together with hedging and surcharges, these actions form a package of measures aimed at preserving profitability amid elevated fuel prices.