Cathay Pacific Airways Ltd. said it will provide bonuses of up to six weeks pay to employees after announcing that its net income for the first half of 2023 could reach as high as HK$4.5 billion ($576 million) as it bounces back from Covid.
Cathay’s shares jumped as much as 6.3% after the mid-day trading break in Hong Kong, hitting the highest this year.
Hong Kong’s main airline is finally joining an industrywide revival in fortunes as travel demand soars despite more expensive airfares. If the first-half profit comes in as forecast, it would be Cathay’s biggest since 2010, even though it is still only operating at about half of its pre-Covid passenger capacity.
Read More: Cathay’s Covid Rebound Gathers Pace With New Forecast
Cathay posted a loss HK$5 billion in the first six months of 2022, when Hong Kong was still saddled with travel restrictions. The airline’s expectations for the first half already top the average full-year forecast of analysts for annual profit of HK$4.2 billion.
“The Covid-19 pandemic was the most challenging period in our history,” Chief Executive Officer Ronald Lam said in a statement Friday, noting that the carrier recorded almost HK$34 billion in losses over three years. “We are moving further and further away from those difficult days with each week that passes.”
In what the company calls a “special appreciation reward,” Cathay will pay staff who stayed through the pandemic up to six weeks salary in September, Lam said. A profit-sharing program will also be introduced for 2023 to 2025, he said, adding that details on that will be shared in August.
After posting record annual profit, Singapore Airlines Ltd. said in May it would hand out bonuses of up to eight months pay.
At the end of last month, Cathay paid the deferred dividend of HK$1.5 billion on preference shares held by the Hong Kong government, provided as part of a recapitalization plan during the pandemic. The carrier said it intends to pay all future dividends as they fall due and buy back the preference shares over the next 12 months, subject to market conditions.
Cathay said its first-half performance was driven by a “significant improvement” in results from its core airline operations and subsidiaries. Results from its associates, chiefly Air China Ltd., continued to drag on the company’s performance. It got a one-off HK$1.9 billion gain in the dilution of its Air China stake, which has dropped to 16.26%.
Cathay’s traffic rose 9.2% in June from May to about 1.5 million passengers. Chief Customer and Commercial Officer Lavinia Lau said frequencies are being increased to cater to strong travel demand. Cargo demand remained flat and will stay that way over the summer before picking up later in the third quarter.
(Updates with more details and comment throughout.)
