Cathay Pacific Set to Acquire Hong Kong Government’s Stake

Hong Kong-based airline Cathay Pacific has provided another financial update regarding the first six months of 2023, also adding that it plans to buy out the Hong Kong government’s stake during the next year.

According to the airline, based on a preliminary review of its results it should finish the period ending on June 30, 2023, with a net profit of between HKD4 billion and HKD4.5 billion ($511.6 million and $575.6 million). This would mark Cathay Pacific’s first H1 profit since 2019.

The profitable first half of the year is driven by Cathay Pacific diluting its stake in Air China (from 18.13% to 16.26%) in January 2023, which generated a non-cash gain of around HKD1.9 billion ($243 million). Furthermore, during H1 2023 the company spent the remaining HKD9.6 billion ($1.2 billion) of the HKD31.1 billion ($4 billion) it raised when it issued Preference Shares back in 2020, using it for “general corporate purposes”.

In addition, it paid HKD1.5 billion ($191.8 million) of deferred dividends to Aviation 2020 Limited, who subscribed to the Preference Shares issues by the airline in 2020. Aviation 2020 Limited is a company owned by Hong Kong’s Financial Secretary.

Subject to market conditions and its business performance, Cathay Pacific plans to redeem all of Aviation 2020’s Preference Shares “over the next 12 months”.

Cathay Pacific expects to publish the final H1 2023 results in August 2023.

On the same day, the carrier also published its H1 2023 traffic figures. The Hong Kong International Airport (HKG)-based airline carried 1.5 million passengers in June 2023, totaling 7.8 million in H1 2023. The latter number is an increase of 2,230% compared to the same period last year.

“Turning to July and August, on the travel side the outlook is encouraging. As we continue to add more flights, we are also reopening more of our lounges for our premium passengers,” said Lavinia Lau, the Chief Customer and Commercial Officer of Cathay Pacific. Lau noted that demand for cargo services is expected to remain flat but then pick up later in the year, namely during Q3 and beyond.