Three Years Earning Over HK$30 Billion, Cathay Pacific Emerges from Massive Loss Shadow, but Middle East Situation Causes Short-term Fuel Costs to Double

Source: Times Finance Author: Li Xinting

After three consecutive years of losses, Cathay Pacific Airways has entered its best three-year period in history.

On March 11, Cathay Pacific (00293.HK, hereafter “Cathay Group”) released its 2025 annual report. Benefiting from increased cargo capacity, stable passenger traffic, and strong freight demand, Cathay Group achieved revenue of HKD 116.766 billion, an 11.9% increase year-over-year; attributable profit to shareholders was HKD 10.828 billion, up 9.5%.

From 2020 to 2022, due to the pandemic and other factors, Cathay Group recorded massive losses for three consecutive years. Through a series of business adjustments, the group returned to profitability starting in 2023, with net profits gradually increasing. From 2023 to 2025, Cathay Group’s total net profit exceeds HKD 30 billion. “2023 to 2025 are the best three years in Cathay Group’s history,” said Cathay Group CEO Ronald Lam at the earnings briefing on March 12.

Founded in Hong Kong in 1946, Cathay Group is part of Swire Pacific’s airline division. Its three core businesses are Cathay Pacific Airways, Cathay Cargo, and Hong Kong Express.

Since Hong Kong has no domestic routes, Cathay Group is a typical hub airline, heavily reliant on cross-border and international markets. In today’s turbulent international situation, Cathay Group must navigate uncertainties and explore new paths.

Cathay Group stated that in 2026, it will increase flight frequencies and launch new routes, with passenger capacity expected to grow by about 10%, thereby driving growth in freight capacity.

Currently, all available aircraft are in operation. In the future, the group will receive over 100 new aircraft.

“By 2026, the group will receive 8 brand-new narrow-body aircraft, of which 5 belong to Hong Kong Express and 3 to Cathay Pacific,” said Ronald Lam during the earnings briefing. He further indicated that in 2027 and 2028, Cathay Group will receive new-generation aircraft including Boeing 777-9, A330-900, and A350F.

Cathay Group CEO Ronald Lam (center) speaking at the earnings briefing.

Over 4,000 employees in Mainland China, with continued expansion planned

Looking at business segments, in 2025, Cathay Pacific’s passenger revenue reached HKD 72.454 billion, a 15.8% increase year-over-year. Passenger numbers totaled 28.871 million, up 26.5%. Passenger load factor was 85.2%, up 2 percentage points, while passenger yield decreased by 10.3%.

As the second-largest revenue segment, Cathay Cargo’s revenue was HKD 24.279 billion, a 1.2% increase. Cargo load factor was 58.8%, down 1.1 percentage points, and yield fell by 4.6% to HKD 2.69 per kilogram, impacted by uncertainties in global trade and supply chains.

Hong Kong Express’s passenger revenue was HKD 6.394 billion, up 6.7%. In 2025, Hong Kong Express carried 7.912 million passengers, a 29.7% increase. Load factor was 79.6%, down 3.8 percentage points, and yield dropped by 15.3%.

However, due to shifts in customer travel preferences, the opening of several new routes (which still require time to mature), and some aircraft still grounded due to ongoing issues with engine reliability, Hong Kong Express recorded a net loss of HKD 996 million before financial expenses and taxes in 2025, further widening the loss compared to 2024.

Expanding presence in Mainland China remains a major focus for Cathay Group in 2025.

This is reflected in personnel appointments. In April 2025, Swire China’s Guangdong-Hong Kong-Macao Greater Bay Area director Zheng Jiajun officially took office as a director of Cathay China, a newly established position aimed at strengthening the strategic development of the Mainland team.

Over the past year, Cathay Group added five new destinations in Mainland China. Cathay Pacific launched routes to Changsha and Urumqi, while Hong Kong Express added routes to Yiwu, Changzhou, and Guiyang. The group also increased flight frequencies on key routes to Beijing, Chengdu, and Guangzhou.

“Currently, Cathay Group has over 4,000 employees in Mainland China, including 800 flight attendants. We will continue to add staff in frontline roles such as trainee pilots, flight attendants, and maintenance engineers. We also plan to cooperate with top Chinese aviation universities to cultivate more aviation talent,” Zheng Jiajun told media at the March 12 earnings briefing.

Middle East tensions cause fuel costs to double

Cathay Group’s core advantage lies in its “Hong Kong international hub” and “global route network” positioning, so changes in international geopolitics inevitably impact its operations.

In 2025, after the U.S. eliminated the duty-free exemption program, demand for e-commerce freight slowed. Recently, the Middle East situation has also brought new changes to Cathay Group’s business.

Ronald Lam said that due to significant capacity reductions by Middle Eastern airlines, passengers who previously transited through the Middle East to Europe, the Americas, and Australia are now choosing Hong Kong as a hub, leading to a noticeable short-term increase in long-haul flights and freight demand.

However, Lam also pointed out that global aviation fuel prices have surged sharply—fuel prices in March nearly doubled compared to January and February. The group has responded by hedging fuel costs and increasing fuel surcharges to cope with short-term cost increases. Lam emphasized that these measures aim to stabilize overall capacity and prevent flight reductions due to rising costs. The group will monitor market conditions and adjust accordingly.

It is noteworthy that, following three years of net profit growth, there are reports that Cathay Group plans to streamline its workforce starting in 2026.

Regarding these measures, Lam said at the earnings briefing that the past three years have been the best in the group’s history, with outstanding financial results. But as the aviation industry gradually normalizes over the next five years, external challenges will persist.

“We want to make the most of this optimal period to improve cost efficiency. In the next five years, no matter what challenges we face, we aim to keep our team and operations stable,” Lam stated.