Cathay Pacific Posts Record Profits Despite Post-Pandemic Woes

Despite slowly rebuilding its capacity post-pandemic, Hong Kong-based carrier Cathay Pacific surged to profitability in 2023 as travel-starved passengers swallowed high ticket prices.

The airline reported a net income of HK$9.79 billion ($1.25 billion) in 2023, returning to the red for the first time since the coronavirus crisis devastated the global travel industry. Most recently, the airline lost $6.6 billion in 2022.

With travel restrictions in Hong Kong and mainland China finally lifted in January 2023, Cathay Pacific saw passenger numbers soar six-fold, from 2.8 million in 2022 to 18 million. Total revenue shot to HK$94.5 billion ($12.1 billion), up 85 percent.

Photo: Cathay Pacific 777-300 Oneworld Livery. Courtesy of Boeing

“In 2023, we finally left the Covid-19 pandemic behind us,” airline chairman Pat Healy said.

However, despite Healy’s statement, the bumper profits—the highest since 2010—were all the more remarkable for how Cathay Pacific continued to contend with the fallout from the pandemic throughout 2023.

The airline reconstructed its schedule more slowly than its closest rival, Singapore Airlines, as it faced stricter travel curbs for longer and more depleted ranks.

Post-Pandemic Challenges

A staff shortage came to a head in December, as illness and annual flying-hour caps for pilots forced Cathay Pacific to cancel at least 68 flights over the holiday period. The carrier then preemptively axed another dozen flights a day through the end of February to avoid further cancellations during the Lunar New Year, China’s busiest travel season.

The Hong Kong Aircrew Officers Association has estimated that Cathay Pacific employs just over half of the number of captains and first officers it did before the pandemic, following a mid-pandemic restructuring that the union says has “turned out to be disastrous for Hong Kong’s aviation skills base.”

Cathay Pacific’s Airbus A350-900. Photo: Courtesy of Kevin Bosc / Unsplash

Cathay Pacific plans to operate 80 percent of its pre-pandemic passenger flight schedule by the second quarter of 2024 despite experiencing staff shortages. However, the CEO, Ronald Lam, has announced that the date of the airline’s return to full capacity has been pushed back to the first quarter of 2025, which is three months later than previously stated. This move is aimed at avoiding further cancellations.

To offset the lower capacity, Cathay Pacific has raised its ticket prices. The post-pandemic travel boom has made passengers willing to pay the excess fare.

Lam admits that the global imbalance between available seats and travel demand is expected to diminish, and yields will continue to normalize throughout 2024.

China’s rocky economic recovery from the COVID crisis will also impact the airline. Though the outlook is uncertain, investors were optimistic about the week’s results. Cathay Pacific’s shares rose 5.8 percent, reaching their highest close in four years. The airline also announced that it will pay a dividend of HK$0.43 per share, the first payout since 2019.

Staff members will also benefit from the recovery, receiving 7.2 weeks of pay as a bonus.