Cathay Pacific “has been turning” a profit since July, analysts from HSBC Global Research believe, as Hong Kong continues to ease pandemic-related restrictions.
A report dated 22 September maintains a bullish forecast for the Hong Kong-based carrier, noting that Cathay’s capacity projections for the year-end “could raise further”.
In its traffic results for August, Cathay revised upwards its year-end capacity forecast to about one-third pre-pandemic levels, versus 25% in earlier projections. HSBC Global Research’s forecast, meanwhile, indicates the airline to be operating about 40% pre-pandemic capacity by year-end.
While it acknowledges that the ramp-up in capacity will take time – given the need to reactivate stored jets and train crew – HSBC states: “We think any shortfall in capacity ramp-up [against] our estimate would likely be offset by higher load factors and elevated yields.”
It comes as Hong Kong mulls doing away with hotel quarantine for all arriving travellers, replacing it with seven days of self-monitoring. The city has already eased crew quarantine measures, and lifted flight bans to several regions.
HSBC Global Research analysts in August indicated that profitability was imminent for Cathay, which had narrowed its half-year losses despite a challenging start to the year.
For the six months to 30 June, Cathay posted a HK$5 billion ($637 million) net loss, compared to 2021’s half-year net loss of HK$7.6 billion.
The analysts forecast, in their latest report, a full-year net loss of around HK$1.1 billion ($140 million), a narrower loss against consensus estimates, and an indication that the airline was returning to profitability.
“[We] remain confident that Cathay will continue to benefit from a strong cargo business amidst elevated cargo yields and robust demand, in addition to a strong recovery in passenger traffic as a result of easing quarantine restrictions in Hong Kong,” they state.