Cathay Pacific on recovery track but Chinese rivals loom

Cathay Pacific Airways is experiencing a long-awaited post-pandemic comeback, but Hong Kong's flagship carrier faces mainland competition that will challenge the airline's status as the gateway to China. Cathay reported a net profit of 4.26b Hong Kong dollars ($544m) for the first half of the year. It was the first black ink in four years, up from roughly HK$5b in losses a year earlier. The company is "on the track" to recovery, Chairman Patrick Healy said when presenting earnings last week. After Hong Kong abolished cross-border COVID travel restrictions in February, Cathay's traffic increased 23 times in the first half from a year earlier to 7.81m passengers. Cathay also lowered fixed costs by slashing its workforce to 21,900 employees, down more than 10,000 employees compared with pre-COVID staffing levels. Rising airfares led to higher per-passenger revenue, contributing to improved earnings. July's passenger traffic stood at 1.74m people, Cathay said Wednesday, up roughly eightfold from a year earlier. More people are flying on routes serving Japan, Southeast Asia and mainland China. For the full year, Cathay is expected to make a net profit of HK$7 billion, according to an average of analyst forecasts compiled by Refinitiv. It would be the largest profit since the HK$14b earned in 2010, which included proceeds from stock sales. Prospects are expected to be bumpy, however. There is a strong potential that Cathay will face heightened competition from mainland airlines, said Andrew Yuen, a director at the Aviation Policy and Research Centre in the Chinese University of Hong Kong. Cathay earns more than half its revenue from Hong Kong, mainland China and Taiwan. The carrier is based at Hong Kong International Airport, a regional hub. Cathay's bread and butter over the years has been capturing demand for international travel back and forth from the mainland through Hong Kong.<br/>