Cathay Pacific Returned to Profit in Second-Half 2021, but 2022 Remains Challenging

Cathay Pacific’s full-year losses of HKD 6.1 billion translates into HKD 1.7 billion profit in the second-half 2021, beating our expectation of HKD 1.3 billion losses. This was helped by exceptionally strong performance in cargo service and lower staff costs after restructuring. We think the positive uplift is unlikely to continue in 2022 given COVID-19 restrictions in Hong Kong and the high fuel price. We increase our loss estimate to HKD 8.6 billion from HKD 3.8 billion for 2022 to account for the reduced capacity and high fuel cost. We expect Cathay to remain in loss of HKD 2.2 billion in 2023, and breakeven in 2024 compared with a turnaround in 2023 in our previous estimates.