Cathay Pacific posts best first-half profit since 2010 despite fuel cost surge

Cathay Pacific Airways reported a 71% rise in first-half profit to HK$6.24 billion, driven by strong passenger and cargo demand, despite a 59% increase in fuel costs.

Cathay Pacific Airways reported its best first-half profit since 2010, staying "cautiously optimistic" on the outlook for the rest of the year despite warning that higher jet fuel prices due to ‌the Middle East conflict were likely to persist.

The Hong Kong flagship carrier said on Wednesday its net profit rose 71% to HK$6.24 billion ($795.59 million) for the six months ended June 30 on the back of strong passenger and cargo demand. The profit was the second-highest in its history for the period ‌despite a 59% year-on-year increase in fuel costs and was near the midpoint of a forecast provided last month.

"Looking ahead, summer travel ‌demand going into the third quarter is looking strong," Cathay Chairman Guy Bradley said in a statement. "We remain cautiously optimistic for the rest of the year, subject to developments in the Middle East situation and other macroeconomic factors." The airline remained on track to grow its passenger capacity by about 10% this year, he added.

Cathay's revenue climbed 25.3% to ⁠HK$68 billion ​in the first half, while its profit ⁠margin grew to 9.2% from 6.7%. The net profit included a one-time gain of about HK$1 billion from the partial dilution of its stake in Air China. Cathay shares ⁠were trading about 2% higher after the results were released during the Hong Kong market's lunch break, up from an earlier gain of 1.25%. SECOND-HALF CHALLENGES

Cathay heads ​into the second half with some of the factors that lifted first-half earnings beginning to fade. The Hong Kong carrier had benefited ⁠as passengers rerouted away from Gulf hubs following disruptions in the Middle East, but Gulf airlines are restoring flights and competing more aggressively for Asia-Europe traffic, while elevated fuel prices are expected ⁠to ​keep pressure on costs.

Jet fuel prices are forecast to average $152 per barrel this year, nearly 70% above 2025 levels, according to the International Air Transport Association. Cathay said its jet fuel costs had almost doubled in the second quarter relative to the first quarter, though the increase ⁠was partially offset by fuel surcharges and a HK$878 million first-half gain from its fuel hedging programme.

"We expect the impact of elevated fuel ⁠prices will continue for the rest ⁠of the year and we remain alert to the changing geopolitical and market situation," Bradley said. Rival Singapore Airlines posted its first quarterly loss since 2022 in the three months ended June 30 despite record revenue, weighed ‌down by high ‌fuel prices and losses from Air India.

($1 = 7.8432 Hong Kong dollars)