CATHAY PAC AIR increases investment in long-haul business, low-cost subsidiary in trouble

Cathay Pacific Airways Limited has purchased Boeing wide-body aircraft for the first time in twelve years, ramping up its long-haul business expansion; meanwhile, its subsidiary Hong Kong Express Airways is struggling in the short-haul market due to a sharp decline in regional demand.

Cathay Pacific announced that it will purchase an additional 14 Boeing 777-9 aircraft and has the option to purchase 7 more of the American company's largest model, confirming earlier reports by Bloomberg News.

The airline announced this order while releasing its half-year results, which disappointed investors and led to its stock price experiencing the largest intraday drop in nearly 17 years. Although the flagship Hong Kong airline saw a slight increase in net profit, poor passenger yield overshadowed the profit growth.

The purchase of Boeing aircraft will expand Cathay's long-haul fleet, which currently includes the Airbus A350. Cathay stated that travel demand for its main brand remains strong, and the company will continue to increase flights and destinations.

In contrast, the company warned that its subsidiary Hong Kong Express Airways faces short-term challenges, partly due to a weak Japanese travel market. The low-cost airline is attempting to offset the impact of the weak Japanese market by expanding its business in Southeast Asia, South Korea, and mainland China.

In the first half of the year, Cathay Pacific's net profit grew by 1.1% to approximately HKD 3.7 billion; revenue increased by 9.5% to HKD 54.3 billion; expenses rose by about 10%. Reflecting ticket price and market competition pressures, yield fell by over 12% to HKD 0.604.

The stock closed down 10%, marking its worst performance in four and a half years