Buoyed by a huge expected swing to profit for the first half of this year, Cathay Pacific (CX, Hong Kong International) has said it will buy back the preference shares currently held by the Hong Kong government as well as repurchase all other preferred stock held elsewhere over the next 12 months. It will also give away two to six weeks’ salary to staff who joined the company on or before December 31 last year.

The group, which besides the mainline carrier also includes cargo specialist Air Hong Kong (LD, Hong Kong International) and budget carrier HK Express (UO, Hong Kong International), announced on July 14 that it expected to record a consolidated profit of around HKD4-4.5 billion Hong Kong dollars (USD512-576 million) for the first half of 2023, including a one-off gain from the sale of a 1.9% shareholding in minority parent Air China (CA, Beijing Capital).

The profit, based on a preliminary review of the group’s unaudited accounts, stands in contrast to a loss of HKD5 billion (USD640 million) for the first half of 2022. The group is still in the process of finalising the interim results and is due to publish them in August 2023.

Cathay Pacific said that on the last day of the period, June 30, it paid a deferred dividend of just over HKD1.52 billion (USD195 million) on the preference shares held by Hong Kong’s government, “bringing its deferred dividend payments up to date.” It now “intends to pay all future preference shares dividends as they fall due.” And, subject to market conditions and its business operations at the relevant time, it aims to buy back all preferred stock over the next 12 months.

The predicted results signal a return to profitability for the first time since the airline sustained record losses of a combined HKD33.7 billion (USD4.3 billion) over the last three years, as post-pandemic travel demand skyrockets with border reopenings. It parked much of its fleet during the air travel closures, shut down most of its offshore pilot bases, and imposed drastic staff cuts. It recently said it hoped to have all of its parked aircraft in the air by the start of 2024.

“We have seen a trend of continuous improvement in the performance of our airlines and our financial position is healthy,” CEO Ronald Lam commented in last week’s statement. “These reflect the growing strength of our business and the progress we are making in rebuilding Cathay. We are very grateful to both the HKSAR Government and our shareholders for their continued support during and after the pandemic.”

Cathay Pacific carried about 7.82 million passengers in the first half of 2023, compared with 335,462 last year, and “our long-haul routes popular for student traffic, such as North America, the UK, and Australasia, all saw good demand,” it said. Passenger load factor was 87.2%.

In appreciation to employees, it will offer a “reward” whereby all those who joined the group on or before December 31, 2022, will receive two weeks of eligible pay, and those who also participated in a Special Leave Scheme or equivalent in 2020, 2021 or 2022 and have been continuously employed since then will be eligible for an additional four weeks’ pay.

However, in its own statement on July 14, the Hong Kong Aircrew Officers Association, which represents the airline’s pilots, called the award “a drop in the ocean compared to the long-term cuts that Cathay has imposed on pilots and cabin crew.” It “contrasts with the temporary cuts to management pay and the bonuses they will receive on the backs of their long-suffering staff,” it added. “It will be years before Hong Kong regains its status as a global aviation hub.”