The airline posted net profit of HK$9.8bn ($1.3bn) for the year on Wednesday, breaking a three-year streak of losses including a HK$6.6bn loss in 2022. Cathay shares rose nearly 4% after the earnings were released.
The profit is the highest since 2010, when it recorded HK$14bn. Global airline groups, including British Airways owner IAG, have also reported strong profits in the past few weeks, as airfares remain higher than pre-pandemic levels.
Cathay CEO Ronald Lam said the global supply-demand imbalance that had driven up yields, or passenger revenue per mile, would diminish and “normalise” this year, while headwinds from inflationary pressures and persistent supply chain issues in the aviation industry, in terms of delivery delays and parts shortages, could affect its outlook negatively.
But Cathay’s results were “characterised by a notable surge in travel demand”, said chair Patrick Healy, in comments reflecting on the end of the pandemic’s influence on consumers’ ability and willingness to fly.
The recovery of Hong Kong as an aviation hub would be “heavily dependent” on a Cathay comeback, said Willie Walsh, head of the International Air Transport Association, at an event in Hong Kong this month, although he said the carrier had been recovering “faster than expected”.
The airline said it would hold global roadshows over the next few months, including potentially in Europe and the Middle East, to attract new pilots. Its pilot workforce is still around 35% lower than 2019 levels as of last month, according to its union, the Hong Kong Aircrew Officers Association.
Singapore Airlines, which released its third-quarter results last month, warned that higher fuel prices and rising operating costs could weigh on its outlook.
Net income for the group, which includes budget arm Scoot, totalled S$2.16bn ($1.62bn) as people embraced flying again after Covid. It posted a loss of S$962mn the previous year. Revenue was S$17.78bn, up from S$7.6bn.
The airline said it could ramp up operations at short notice when demand for air travel surged after Singapore fully reopened its borders in April 2022 and restrictions eased globally. “Demand for air travel remains robust in the first quarter,” it said in a statement to the stock exchange on Tuesday.
Singapore Airlines and Scoot carried 26.5mn passengers in the year, six times higher than the 12 months through March 2022, with passenger capacity rising to 79% of pre-Covid levels in March. The airline said it flew 1.75mn passengers in April, up 53% from the same month last year.
Citigroup Inc last month upgraded Singapore Airlines to “buy” from “sell” and raised its price target to S$6.41 from S$5.16. The shares climbed 3.6% in the quarter through March for a gain of 4.2% in the 12-month period.
“Geopolitical and macroeconomic uncertainties, as well as high cost inflation, could pose challenges for the airline industry in the months ahead. Even though fuel prices have moderated in recent months, they remain at elevated levels,” it said.
It also expects competition to increase , while cargo demand is likely to remain soft in the near term, with inflation and weak economic conditions impacting consumer demand and trade.
Singapore Airlines’ shares edged 0.3% higher before the results on Tuesday to S$5.92. The company proposed a final dividend of S$0.28 per share.
International Airlines Group; the parent company of British Airways, Iberia, and other airlines, reported a robust financial performance for the full year of 2023. CEO Luis Gallego announced a full year operating profit of €3.5bn, a significant increase from €1.2bn in 2022 and surpassing the €3.3bn mark from 2019. The operating margin reached 11.9%, nearly at pre-pandemic levels. IAG's strategic initiatives, including capacity growth and transformation efforts, have contributed to this success.
The Spanish brands, particularly Iberia and Vueling, along with the IAG Loyalty programme, have shown strong results.
The company also made notable strides in sustainability, reducing carbon intensity, and securing a sustainable aviation fuel contract. Looking ahead to 2024, IAG is confident in generating substantial free cash flow and maintaining a fortified balance sheet, supported by a comprehensive transformation programme and customer-centric investments.
In Germany, the Lufthansa Group generated the third-best financial result in its history due to the continued high demand for air travel and another record result at Lufthansa Technik. Revenue increased to €35.4bn (previous year: €30.9bn). In the financial year 2023, operating profit, measured as Adjusted EBIT, rose to €2.7bn (previous year: €1.5bn). The Adjusted EBIT margin improved accordingly to 7.6% (previous year: 4.9%). The company more than doubled its net profit to €1.7bn (previous year: €790mn).
Lufthansa said the desire to travel remained high last year. Demand for tickets rose once again. In 2023, a total of 123mn passengers travelled with the airlines of the Lufthansa Group, an increase of 20 percent compared to the previous year (2022: 102mn).
The Lufthansa Group airlines increased the number of flights offered by 14% to 946,000. The number of seats on offer was gradually expanded over the course of the year. On average, the airlines offered 84% of 2019 capacity last year. The seat load factor improved by 3.1 percentage points to around 83%, returning to pre-crisis levels. "The strong result for the financial year 2023 is another important step in positioning the Lufthansa Group for the future” Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa said. “Our solid balance sheet and strong free cash flow enable us to make the necessary investments in our fleet and our product. I am convinced that these investments will pay off - for our customers, but also for our shareholders.
Over the past three years, I have had the privilege of supporting the company in overcoming the crisis and putting the Group back on a solid financial footing. The Lufthansa Group has set itself the goal of continuing to pursue the path of profitable growth in order to increase the operating margin in the long term and continue to create value in the future. I am particularly pleased that we can once again allow our shareholders to participate in our success by resuming dividend payments."
