Cathay Pacific, the Hong Kong flag carrier, has announced a dramatic turnaround from its previous $1.26 billion loss. The airline did have a great second half of the year. The global airline has a strong focus on its hub at Hong Kong International Airport. Its shares are at a 10-year high, reflecting strong investor confidence in its recovery and long-term earnings potential.
Cathay Pacific’s resurgence follows a challenging period marked by layoffs in 2020 due to the impacts of the COVID-19 pandemic. The home state airline made some difficult decisions in the challenging administration created by the worldwide crisis. Now, more than ever, it’s poised to spring back. With its main operations regaining momentum, Cathay Pacific is benefiting from an increase in passenger demand as travel restrictions ease.
The airline’s low-cost subsidiary, HK Express, is under siege. Though Cathay Pacific has strong recovering fortunes, HK Express has taken a hit from soft demand to Japan. As a consequence, the budget carrier has continued to face challenges finding success, especially operating within one of the most competitive markets. Yet Cathay Pacific and HK Express illustrate sharply contrasting fortunes in today’s aviation environment. Their divergent trajectories are indicative of the industry’s ongoing fight to recover from the pandemic’s impact.
On October 24, 2020, the first image surfaced of Cathay Pacific’s planes parked on the tarmac. The challenge photo had included HK Express aircraft standing idle at Hong Kong International Airport’s parking bays. This stunning and deeply poetic visual representation of the airline’s operational status acts as a stark reminder of the struggles experienced in the pandemic. As air travel gradually resumes, Cathay Pacific’s fleet is now becoming more active, reflecting the airline’s optimistic outlook.
As the confidence returns to the Asian skies, Cathay Pacific has been well-placed to take advantage of its long-earned brand reputation and operational strengths. In addition to investing in improving the customer experience, the airline is adding routes and frequencies to stay ahead of the rapidly growing demand. Investors are loaded up and closely monitoring these market developments. What they’re most interested in is how Cathay Pacific is adjusting to the ever-evolving global transportation network.