Group 1 - Cathay Group reported a record high of approximately 3.2 million passengers carried in July, marking the highest monthly figure for the year [1] - The cargo business transported over 140,000 metric tons in July [1] - Cathay Pacific's passenger load factor reached 86% in July, indicating strong demand for air travel [1] Group 2 - The strong passenger demand in July was primarily driven by long-haul travel from students and family visitors in the first half of the month [1] - The latter half of July saw a shift towards leisure travel to destinations such as South Korea and Southeast Asia [1]

Core Viewpoint - The article emphasizes the importance of value investing, highlighting companies that are undervalued by the market and using metrics like P/E and P/B ratios to identify strong investment opportunities [2][4][5]. Group 1: Cathay Pacific Airways (CPCAY) - Cathay Pacific Airways currently has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [4]. - The stock has a P/E ratio of 8.18, significantly lower than the industry average of 12.45, suggesting it may be undervalued [4]. - Over the past 12 months, CPCAY's Forward P/E has fluctuated between 5.56 and 9.84, with a median of 7.77, further indicating its valuation dynamics [4]. - CPCAY's P/B ratio stands at 1.37, compared to the industry average of 3.76, reinforcing its attractiveness as a value stock [5]. - The P/B ratio has ranged from 0.82 to 1.51 over the past year, with a median of 1.21, showcasing its relative valuation stability [5]. Group 2: Japan Airlines (JAPSY) - Japan Airlines is rated as a Zacks Rank 1 (Strong Buy) stock with an A Value Score, making it another appealing option for value investors [6]. - The P/B ratio for Japan Airlines is 1.40, which is also lower than the industry average of 3.76, indicating potential undervaluation [6]. - Over the past year, JAPSY's P/B ratio has varied between 1.01 and 1.41, with a median of 1.15, reflecting its valuation trends [6]. Group 3: Overall Value Assessment - Both Cathay Pacific Airways and Japan Airlines exhibit strong value characteristics, suggesting they are currently undervalued in the market [7]. - The combination of low P/E and P/B ratios, along with positive earnings outlooks, positions these stocks as impressive value opportunities [7].

Investment Rating - The report maintains a "Positive" outlook on the shipping sector, particularly highlighting the potential for VLCC (Very Large Crude Carrier) rates to strengthen in the upcoming months [4]. Core Insights - The report indicates that tanker rates have exceeded expectations during the off-season, with VLCC rates expected to perform strongly from September to December due to reduced exports from Iran and increased production in the Middle East [4]. - The report recommends specific companies such as China Merchants Energy Shipping and highlights the potential for consolidation in the Chinese shipping industry [4]. - The report emphasizes the resilience of freight volumes in rail and highway transport, suggesting steady growth in these sectors [4]. Summary by Sections Shipping Sector - VLCC rates increased by 32% this week, reaching $45,800 per day, driven by limited supply and increased demand from the Atlantic market [4]. - The report notes that the average export volume from Iran has decreased to 1.3-1.5 million barrels per day, down from 1.7-1.9 million barrels per day in July [4]. - The Suez crude oil tanker rates rose by 15% to $59,563 per day, supported by strong demand from the West African market [4]. Dry Bulk Shipping - The Baltic Dry Index (BDI) fell by 4.9% to 1,944 points, primarily due to a decline in large vessel rates, while smaller vessels showed stronger performance [5]. - The report remains optimistic about the Capesize bulk carrier market in the second half of the year, citing expected increases in shipments from major miners [4]. Air Transport - The report suggests that the "anti-involution" policy from the Civil Aviation Administration is likely to optimize competition in the airline industry, benefiting airline profitability in the long term [4]. - Recommended airlines include China Eastern Airlines, Spring Airlines, and China Southern Airlines, with a focus on the potential for improved earnings due to supply constraints and demand recovery [4]. Express Delivery - The report anticipates a price increase in the express delivery sector driven by the "anti-involution" policy, with expectations for sustained profitability in the e-commerce delivery segment [4]. - Companies such as Shentong Express and YTO Express are highlighted as having strong potential for recovery and valuation improvement [4]. Rail and Highway Transport - Data from the Ministry of Transport indicates that rail freight volume increased by 1.22% week-on-week, while highway freight traffic rose by 3.06% [4]. - The report identifies two main investment themes in the highway sector: high dividend yield stocks and potential value recovery in undervalued stocks [4].

CATHAY PACIFIC AIRWAYS LIMITED 國 泰 航 空 有 限公 司 (於香港註冊成立的有限公司) (股份代號：293) 國泰航空有限公司（「公司」）的本次公司通訊之中、英文版本已上載於公司網站 (www.cathaypacific.com) 之投資者關係網頁及香港交易及結算所有限公司（「香港交易所」）網站 (www.hkexnews.hk)，歡迎查閱。如 閣下已選擇收取公司通訊( 附註 2)之印刷本，現隨函附上 閣下所選擇的語言版本之本次公司通訊印刷本。 通 知 信 函 各位非登記持有人( 附註 1)： 二零二五年中期報告（「本次公司通訊」）之發布通知 附註： 1. 本函件乃向公司之非登記持有人（「非登記持有人」指公司股份存放於中央結算及交收系統的人士或公司，透過香港中 央結算有限公司不時向公司發出通知表示該等人士或公司希望收到公司通訊）發出。倘若 閣下已出售或轉讓所持有的 所有公司股份，則無需理會本函及隨附的申請表格。 2. 「公司通訊」乃公司已發出或將予發出以供其任何證券持有人參照或採取行動的所有文件，包括（但不限於）年度和中 期財務報告及其摘要報告（及其中包含的所有報告及財務報表 ...

CATHAY PACIFIC AIRWAYS LIMITED 國 泰 航 空 有 限公 司 各位股東： 二零二五年中期報告（「本次公司通訊」）之發布通知 國泰航空有限公司（「公司」）的本次公司通訊之中、英文版本已上載於公司網站 (www.cathaypacific.com) 之投資者關係網頁及香港交易及結算所有限公司（「香港交易所」）網站 (www.hkexnews.hk)，歡迎查閱。如 閣下已選擇收取公司通訊( 附註 1)之印刷本，現隨函附上 閣下所選擇的語言版本之本次公司通訊印刷本。 以電子方式發布公司通訊之新安排 根據《香港聯合交易所有限公司證券上市規則》（「上市規則」）、《公司條例》（香港法例第 622 章）（其 中包括於 2025 年 4 月 17 日生效的《2025 年公司（修訂）條例》）及公司的組織章程細則，公司現特來函通知 閣下公司已採用電子方式發布公司通訊，即所有日後公司通訊的英文版和中文版均將刊登於公司網站 (www.cathaypacific.com) 及香港交易所網站 (www.hkexnews.hk)，以代替印刷本。另外，公司會根據上市規 則向其股東個別發送可供採取行動的公司通訊( ...

[Financial and Operating Summary](index=4&type=section&id=%E8%B2%A1%E5%8B%99%E5%8F%8A%E7%87%9F%E6%A5%AD%E6%91%98%E8%A6%81) This section provides a concise overview of the Group's financial performance, operating statistics, and fleet information for the first half of 2025 [Group Financial Statistics](index=4&type=section&id=%E9%9B%86%E5%9C%98%E8%B2%A1%E5%8B%99%E7%B5%B1%E8%A8%88%E6%95%B8%E5%AD%97) For the six months ended June 30, 2025, Cathay Group reported robust financial performance with a 9.5% increase in revenue and a slight 1.1% rise in profit attributable to shareholders 2025 First Half Key Financial Results | Metric | 2025 First Half | 2024 First Half | Change | | :--- | :--- | :--- | :--- | | **Revenue** | HKD 54.309 billion | HKD 49.604 billion | +9.5% | | **Profit Attributable to Cathay Group Shareholders** | HKD 3.651 billion | HKD 3.613 billion | +1.1% | | **Earnings Per Ordinary Share (Basic)** | 56.7 HK cents | 52.4 HK cents | +8.2% | | **Dividend Per Ordinary Share** | 20 HK cents | 20 HK cents | – | 2025 June 30 Key Financial Position | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Funds Attributable to Cathay Group Shareholders** | HKD 51.654 billion | HKD 52.500 billion | -1.6% | | **Net Borrowings** | HKD 56.342 billion | HKD 57.941 billion | -2.8% | | **Available Unrestricted Liquidity** | HKD 21.504 billion | HKD 19.073 billion | +12.7% | | **Net Debt to Equity Ratio** | 1.09 times | 1.10 times | -0.01 times | [Operating Statistics](index=4&type=section&id=%E7%87%9F%E6%A5%AD%E7%B5%B1%E8%A8%88%E6%95%B8%E5%AD%97) In the first half of 2025, the Group's overall capacity (Available Tonne Kilometers) increased by 15.9% year-on-year, with Cathay Pacific's passenger load factor improving to 84.8% - Cathay Pacific's passenger numbers increased by **27.8%** year-on-year to **13.627 million**, with the passenger load factor rising from 82.4% to **84.8%**[10](index=10&type=chunk) - Cathay Cargo's carried cargo volume increased by **11.4%** year-on-year to **801 thousand tonnes**, though the cargo load factor slightly decreased from 59.9% to **58.6%**[10](index=10&type=chunk) - HK Express's passenger numbers increased by **33.5%** year-on-year to **3.791 million**, but the passenger load factor declined from 85.0% to **78.9%**[10](index=10&type=chunk) [Fleet Information](index=5&type=section&id=%E6%A9%9F%E9%9A%8A%E8%B3%87%E6%96%99) As of June 30, 2025, Cathay Group operated a total of 234 aircraft and had 93 new aircraft on order, demonstrating its commitment to future fleet expansion Group Fleet Size and Orders (as of June 30, 2025) | Airline | Aircraft in Operation | Aircraft on Order | | :--- | :--- | :--- | | Cathay Pacific | 179 | 71 | | HK Express | 41 | 22 | | Air Hong Kong | 14 | 0 | | **Group Total** | **234** | **93** | - The 93 new aircraft on order include **30 A330-900s**, **21 777-9 passenger aircraft**, and **6 A350F cargo aircraft**, aimed at fleet modernization and efficiency enhancement[12](index=12&type=chunk) [Chairman's Letter](index=6&type=section&id=%E4%B8%BB%E5%B8%AD%E8%87%B4%E5%87%BD) This section outlines the Group's performance, key business segment results, and future outlook, highlighting strategic investments and market confidence [Cathay Group Performance](index=6&type=section&id=%E5%9C%8B%E6%B3%B0%E9%9B%86%E5%9C%98%E7%9A%84%E8%A1%A8%E7%8F%BE) In the first half of 2025, Cathay Group reported a slight year-on-year increase in profit attributable to shareholders, driven by increased passenger volumes, stable cargo performance, and lower fuel prices 2025 First Half Performance Overview | Metric | Amount | Year-on-Year Change | | :--- | :--- | :--- | | Profit Attributable | HKD 3.651 billion | +1.1% | | Earnings Per Ordinary Share | 56.7 HK cents | +8.2% | | Interim Dividend | 20 HK cents per share | Flat | - The Group repurchased convertible bonds worth **HKD 4.558 billion** in January 2025, representing approximately **68%** of the total issued amount[16](index=16&type=chunk) - As of June 30, 2025, the Group's available unrestricted liquidity balance was **HKD 21.504 billion**[16](index=16&type=chunk) [Performance of the Four Core Businesses](index=6&type=section&id=%E5%9B%9B%E5%A4%A7%E6%A5%AD%E5%8B%99%E7%9A%84%E8%A1%A8%E7%8F%BE) Cathay Pacific's passenger revenue grew by 14.0%, while Cathay Cargo's revenue increased by 2.2%, demonstrating resilience, though HK Express recorded a pre-tax loss due to market factors - Cathay Pacific's passenger revenue was **HKD 34.208 billion**, a **14.0%** year-on-year increase, carrying **13.6 million passengers**, up **27.8%** year-on-year[17](index=17&type=chunk) - Cathay Cargo's revenue was **HKD 11.141 billion**, a **2.2%** year-on-year increase, showcasing business adaptability[18](index=18&type=chunk) - HK Express recorded a pre-tax loss of **HKD 524 million**, compared to a profit of HKD 66 million in the same period last year, primarily due to a temporary slowdown in Japan travel demand and new routes still maturing[19](index=19&type=chunk) [Performance of Subsidiaries and Associates](index=7&type=section&id=%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E5%8F%8A%E8%81%AF%E5%B1%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E6%A5%AD%E5%8B%99%E8%A1%A8%E7%8F%BE) Air Hong Kong maintained stable performance, while subsidiaries providing services to airlines saw improved results, and associate companies like Air China also showed better performance - Air Hong Kong recorded a pre-tax profit of **HKD 474 million**, largely stable compared to HKD 488 million in the same period last year, maintaining robust performance[20](index=20&type=chunk) - Associate companies' performance improved, mainly benefiting from Air China's enhanced revenue management and cost control, as well as Air Cargo's business expansion[20](index=20&type=chunk) [Outlook](index=7&type=section&id=%E5%89%8D%E6%99%AF) The Group expresses confidence in the future, investing over HKD 100 billion in its fleet, products, and digital innovation, with strong travel demand for Cathay Pacific and expected long-term profitability for HK Express - The Group is investing over **HKD 100 billion** in its fleet, cabins, lounges, and digital innovation, reaffirming its commitment to the Hong Kong International Aviation Hub[21](index=21&type=chunk) - HK Express faces short-term challenges, but flight bookings to Japan have rebounded, and new routes, despite needing time to develop, have shown enthusiastic initial responses, with long-term profitability expected[21](index=21&type=chunk) [Business Review](index=9&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides a detailed review of Cathay Pacific, Cathay Cargo, Lifestyle business, and the performance of key subsidiaries and associates, alongside the Group's strategic leadership directions [Cathay Pacific](index=9&type=section&id=%E5%9C%8B%E6%B3%B0%E8%88%AA%E7%A9%BA) In the first half of 2025, Cathay Pacific's passenger business continued its recovery, with revenue increasing by 14.0% and passenger load factor improving to 84.8% Cathay Pacific 2025 First Half Passenger Performance | Metric | 2025 First Half | Year-on-Year Change | | :--- | :--- | :--- | | Passenger Revenue | HKD 34.208 billion | +14.0% | | Available Seat Kilometers (ASK) | 66.792 billion | +26.3% | | Revenue Passenger Kilometers (RPK) | 56.651 billion | +30.0% | | Passengers Carried | 13.6 million | +27.8% | | Passenger Load Factor | 84.8% | +2.4 percentage points | | Passenger Yield | 60.4 HK cents | -12.3% | - The company launched passenger services to Hyderabad, Dallas Fort Worth, Urumqi, Rome, and Munich, and increased frequencies on other routes across its global network[24](index=24&type=chunk) - Awarded among the **top three best airlines globally** by Skytrax, also receiving accolades for "World's Best Economy Class" and "World's Best Inflight Entertainment"[14](index=14&type=chunk)[36](index=36&type=chunk) [Cathay Cargo](index=12&type=section&id=%E5%9C%8B%E6%B3%B0%E8%B2%A8%E9%81%8B) In the first half of 2025, Cathay Cargo's revenue reached HKD 11.141 billion, a 2.2% increase, demonstrating resilience despite market uncertainties like tariff changes Cathay Cargo 2025 First Half Performance | Metric | 2025 First Half | Year-on-Year Change | | :--- | :--- | :--- | | Cargo Revenue | HKD 11.141 billion | +2.2% | | Available Freight Tonne Kilometers (AFTK) | 7.336 billion | +8.1% | | Cargo Carried | 801 thousand tonnes | +11.4% | | Cargo Load Factor | 58.6% | -1.3 percentage points | | Cargo Yield | HKD 2.59 | -3.4% | - Despite the impact of increased US tariffs and the removal of de minimis exemptions on e-commerce demand, the company offset some negative effects by increasing other cargo shipments[42](index=42&type=chunk) - Awarded "Cargo Operator of the Year" by Air Transport World (ATW), recognizing its outstanding operational performance[57](index=57&type=chunk) [Lifestyle](index=15&type=section&id=%E7%94%9F%E6%B4%BB%E5%93%81%E5%91%B3) Cathay's Lifestyle business continued to grow in the first half of 2025, with increasing active membership and expanded product offerings across miles, hotels, retail, and experiences - Active Cathay membership continues to grow, with brand awareness and member engagement enhanced through initiatives like the "Cathay Member Premium Awards"[59](index=59&type=chunk) - Joint credit card partnerships with Standard Chartered Bank performed well in Asia Pacific, with re-launches in the US and Macau, while collaborations with fintech companies Mox Bank and Neo Financial helped acquire new customer segments[61](index=61&type=chunk)[63](index=63&type=chunk) - The "Miles Rewards" program expanded to **89 partner brands** and launched a global online shopping platform, "Miles Rewards Hub"; Cathay Holidays hotel platform expanded into four new markets[64](index=64&type=chunk)[65](index=65&type=chunk) - Successfully built in-house retail media sales capabilities, reducing reliance on agencies, and secured comprehensive media partnerships with premium brands like The Macallan[71](index=71&type=chunk)[76](index=76&type=chunk) [Performance and Business Review of Key Subsidiaries and Associates](index=17&type=section&id=%E9%87%8D%E8%A6%81%E9%99%84%E5%B1%AC%E5%8F%8A%E8%81%AF%E5%B1%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E8%A1%A8%E7%8F%BE%E5%8F%8A%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's subsidiaries and associates showed varied performance in the first half of 2025, with HK Express recording a loss due to market factors, while Air Hong Kong and aviation service providers improved [HK Express Airways Limited](index=17&type=section&id=%E9%A6%99%E6%B8%AF%E5%BF%AB%E9%81%8B%E8%88%AA%E7%A9%BA%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8) HK Express expanded aggressively in the first half of 2025, launching nine new routes, but recorded a pre-tax loss of HKD 524 million due to factors like a temporary slowdown in Japan travel demand HK Express 2025 First Half Operating Results | Metric | Amount (HKD million) | Year-on-Year Change | | :--- | :--- | :--- | | Total Revenue | 3,171 | -0.1% | | Operating Expenses | (3,695) | +18.8% | | **(Loss)/Profit Before Net Finance Costs and Tax** | **(524)** | **-893.9%** | - Launched nine new routes in the first half, including Sendai, Ishigaki, Changzhou, and Cheongju, continuously expanding its Asian route network[71](index=71&type=chunk)[73](index=73&type=chunk) [Air Hong Kong Limited](index=19&type=section&id=%E9%A6%99%E6%B8%AF%E8%8F%AF%E6%B0%91%E8%88%AA%E7%A9%BA%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8) Air Hong Kong, primarily operating express cargo services for DHL Express, maintained stable performance in the first half of 2025, completing its fleet modernization to more fuel-efficient A330F freighters - Air Hong Kong's profit in the first half of 2025 was comparable to the same period in 2024, maintaining stable performance[84](index=84&type=chunk) - Completed its fleet modernization program, replacing A300-600F freighters with larger, more fuel-efficient A330F freighters[84](index=84&type=chunk) [Major Subsidiaries Providing Services to Airlines](index=19&type=section&id=%E7%82%BA%E8%88%AA%E7%A9%BA%E5%85%AC%E5%8F%B8%E6%8F%90%E4%BE%9B%E6%9C%8D%E5%8B%99%E7%9A%84%E9%87%8D%E5%A4%A7%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8) As the aviation market recovered, subsidiaries providing services to airlines saw improved performance, including Cathay Pacific Catering, Cathay Pacific Cargo Terminal, and Hong Kong Airport Services - Cathay Pacific Catering: Produced **14.1 million inflight meals** in the first half, a **27%** year-on-year increase[82](index=82&type=chunk) - Cathay Pacific Cargo Terminal: Handled **795 thousand tonnes of cargo** in the first half, an **8%** year-on-year increase[85](index=85&type=chunk) - Hong Kong Airport Services: Handled **22.3%** more flights (ramp operations) and **26.5%** more flights (ground handling operations) year-on-year in the first half[87](index=87&type=chunk) [Major Associate Companies](index=20&type=section&id=%E9%87%8D%E5%A4%A7%E8%81%AF%E5%B1%AC%E5%85%AC%E5%8F%B8) The Group's share of results from major associate companies improved, with Air China and Air Cargo showing better financial performance due to enhanced revenue management and business expansion - The Group's share of Air China's results improved; as of June 30, 2025, the net book value of the Group's investment in Air China was **HKD 9.936 billion**[88](index=88&type=chunk) - The Group's share of Air Cargo's results improved; the Group's shareholding was diluted from 21.36% to **21.01%** due to Air Cargo's exercise of its over-allotment option[88](index=88&type=chunk)[89](index=89&type=chunk)[93](index=93&type=chunk) [Our Leadership Directions](index=21&type=section&id=%E6%88%91%E5%80%91%E7%9A%84%E9%A0%98%E5%B0%8E%E6%96%B9%E5%90%91) Cathay's corporate strategy is centered on three leadership directions: safety and operational excellence, transformation into a digital pioneer, and leadership in sustainability - Cathay's three leadership directions form a crucial part of its corporate strategy: safety and operational excellence, transformation into a digital pioneer, and leadership in sustainability[91](index=91&type=chunk) [Safety and Operational Excellence](index=21&type=section&id=%E5%AE%89%E5%85%A8%E5%8F%8A%E5%8D%93%E8%B6%8A%E7%87%9F%E9%81%8B) Cathay prioritizes safety as the foundation of its success, maintaining a strong safety culture through a structured Safety Management System and leadership commitment - The company prioritizes safety, systematically ensuring the highest safety standards through a structured Safety Management System (SMS), and successfully passed the IATA Operational Safety Audit (IOSA) certification[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - To prepare for the three-runway system, the company utilizes digital tools and an integrated operations center, improving flight punctuality by **4.7 percentage points** compared to the same period last year[97](index=97&type=chunk) [Digital Initiatives](index=22&type=section&id=%E6%95%B8%E7%A2%BC%E5%B7%A5%E4%BD%9C) Cathay is committed to transforming into a digital pioneer, investing over HKD 3 billion annually in technology R&D and making significant progress in data analytics, AI, cybersecurity, and digital talent development - Annually invests over **HKD 3 billion** in technology R&D and digital innovation, having developed over **85 machine learning models** to optimize operations[98](index=98&type=chunk)[102](index=102&type=chunk) - Established a new subsidiary, "Cathay Tech," dedicated to commercializing internally developed digital products (e.g., "Electronic Flight Bag") and collaborating with Hong Kong Science Park to support startups[102](index=102&type=chunk) - Opened a new office in Qianhai, Shenzhen, expanding its digital and IT teams in the Greater Bay Area to capitalize on AI opportunities[100](index=100&type=chunk) [Sustainability](index=23&type=section&id=%E5%8F%AF%E6%8C%81%E7%BA%8C%E7%99%BC%E5%B1%95) Cathay is committed to leadership in sustainability, pledging to achieve net-zero carbon emissions by 2050 and increase Sustainable Aviation Fuel (SAF) usage to 10% by 2030 - Key sustainability commitments include achieving **net-zero carbon emissions by 2050**, **10% SAF usage by 2030**, and significantly reducing single-use plastics[102](index=102&type=chunk) - Signed an agreement with Sinopec to uplift domestically produced SAF for some flights at Hong Kong International Airport and a SAF supply agreement with SK Energy in Korea[106](index=106&type=chunk) - As of June 30, 2025, the Group employed over **32,200 staff globally**, with approximately **27,300** based in Hong Kong[105](index=105&type=chunk) [Financial Review](index=26&type=section&id=%E8%B2%A1%E5%8B%99%E8%A9%95%E8%BF%B0) This section provides a detailed analysis of the Group's revenue, operating expenses, operating results, fuel costs, and financial position for the first half of 2025 [Revenue](index=26&type=section&id=%E6%94%B6%E7%9B%8A) In the first half of 2025, Cathay Group's total revenue increased by 9.5% year-on-year to HKD 54.309 billion, primarily driven by a 12.7% growth in passenger service revenue Cathay Group Revenue Breakdown (Six Months Ended June 30) | Revenue Category | 2025 (HKD million) | 2024 (HKD million) | Change | | :--- | :--- | :--- | :--- | | Passenger Services | 37,212 | 33,004 | +12.7% | | Cargo Services | 12,761 | 12,610 | +1.2% | | Other Services and Recoveries | 4,336 | 3,990 | +8.7% | | **Total Revenue** | **54,309** | **49,604** | **+9.5%** | [Operating Expenses](index=26&type=section&id=%E7%87%9F%E6%A5%AD%E9%96%8B%E6%94%AF) The Group's total operating expenses increased by 10.4% year-on-year to HKD 49.860 billion in the first half, mainly due to higher staff, landing, parking, and en-route charges driven by increased capacity Cathay Group Operating Expense Breakdown (Six Months Ended June 30) | Expense Category | 2025 (HKD million) | 2024 (HKD million) | Change | | :--- | :--- | :--- | :--- | | Staff | 9,382 | 7,770 | +20.7% | | Landing, Parking and En-route Charges | 8,076 | 6,572 | +22.9% | | Fuel (including hedging) | 14,654 | 14,160 | +3.5% | | **Total Operating Expenses** | **49,860** | **45,152** | **+10.4%** | - The company's cost per Available Tonne Kilometer (including fuel) decreased by **4.1%** from HKD 3.42 to **HKD 3.28**[116](index=116&type=chunk) - The company's cost per Available Tonne Kilometer (excluding fuel) decreased by **0.9%** from HKD 2.32 to **HKD 2.30**[117](index=117&type=chunk) [Operating Results Analysis](index=27&type=section&id=%E7%87%9F%E6%A5%AD%E6%A5%AD%E7%B8%BE%E5%88%86%E6%9E%90) In the first half of 2025, the Group's profit attributable to shareholders was HKD 3.651 billion, largely stable year-on-year, with a significant reduction in losses from associate companies contributing positively Operating Results Analysis (Six Months Ended June 30) | Item | 2025 (HKD million) | 2024 (HKD million) | Change | | :--- | :--- | :--- | :--- | | Profit After Tax (excluding non-recurring items) from Company and Subsidiaries | 3,832 | 3,846 | -0.4% | | Share of Losses from Associate Companies | (181) | (342) | -47.1% | | **Profit Attributable to Group Shareholders** | **3,651** | **3,613** | **+1.1%** | - Profit growth primarily stemmed from increased passenger and cargo revenue (**+HKD 4.430 billion**), offset by rising staff, fuel, and landing/parking costs[119](index=119&type=chunk) [Fuel Expenses and Hedging](index=28&type=section&id=%E7%87%83%E6%B2%B9%E9%96%8B%E6%94%AF%E5%8F%8A%E5%B0%8D%E6%B2%96) The Group's net fuel cost increased by 3.5% to HKD 14.654 billion in the first half, mainly due to a 19.0% increase in fuel consumption, partially offset by a 14.3% decrease in average aircraft fuel prices Group Fuel Cost Breakdown (Six Months Ended June 30) | Item | 2025 (HKD million) | 2024 (HKD million) | | :--- | :--- | :--- | | Total Fuel Cost | 14,436 | 14,221 | | Fuel Hedging Loss / (Profit) | 218 | (61) | | **Net Fuel Cost** | **14,654** | **14,160** | [Financial Position](index=28&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81) As of June 30, 2025, the Group maintained a robust financial position with available unrestricted liquidity increasing to HKD 21.504 billion and net borrowings decreasing by 2.8% - Available unrestricted liquidity totaled **HKD 21.504 billion**, a **12.7%** increase from the end of 2024[121](index=121&type=chunk) - Net borrowings decreased by **2.8%** to **HKD 56.342 billion**[122](index=122&type=chunk) - Excluding leases without asset transfer elements, the net debt to equity ratio decreased from 0.90 times to **0.87 times**, indicating a healthy financial leverage level[122](index=122&type=chunk) [Review Report](index=29&type=section&id=%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) This section presents the conclusion of the independent review report on the Group's interim financial information [Review Report Conclusion](index=29&type=section&id=%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A%E7%B5%90%E8%AB%96) KPMG, the auditor, conducted a review of the Group's interim financial report in accordance with Hong Kong Standard on Review Engagements 2410 and found no material matters suggesting non-compliance with HKAS 34 - KPMG, the auditor, issued an unqualified review conclusion on the interim financial report[125](index=125&type=chunk)[126](index=126&type=chunk) [Condensed Financial Statements](index=30&type=section&id=%E7%B0%A1%E6%98%8E%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section provides the condensed consolidated income statement, statement of financial position, cash flow statement, and notes to the condensed financial statements [Consolidated Income Statement](index=30&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the Group reported total revenue of HKD 54.309 billion, operating profit of HKD 5.926 billion, and profit for the period attributable to ordinary equity holders of HKD 3.651 billion Consolidated Income Statement Summary (Six Months Ended June 30, 2025) | Metric | Amount (HKD million) | | :--- | :--- | | Total Revenue | 54,309 | | Operating Profit | 5,926 | | Profit Before Tax | 4,321 | | **Profit for the Period** | **3,651** | [Consolidated Statement of Financial Position](index=32&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the Group's total assets amounted to HKD 170.302 billion, with total liabilities of HKD 118.641 billion, resulting in net assets of HKD 51.661 billion Consolidated Statement of Financial Position Summary (as of June 30, 2025) | Metric | Amount (HKD million) | | :--- | :--- | | Net Non-Current Assets | 86,091 | | Net Current Liabilities | (34,430) | | **Net Assets** | **51,661** | | **Funds Attributable to Cathay Group Shareholders** | **51,654** | [Consolidated Cash Flow Statement](index=33&type=section&id=%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, the Group generated net cash inflow from operating activities of HKD 11.153 billion, with net cash outflows from investing and financing activities Consolidated Cash Flow Statement Summary (Six Months Ended June 30, 2025) | Metric | Amount (HKD million) | | :--- | :--- | | Net Cash Inflow from Operating Activities | 11,153 | | Net Cash Outflow from Investing Activities | (4,267) | | Net Cash Outflow from Financing Activities | (9,130) | | **Net Decrease in Cash and Cash Equivalents** | **(2,244)** | [Notes to the Condensed Financial Statements](index=35&type=section&id=%E7%B0%A1%E6%98%8E%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) The notes provide detailed explanations of accounting policies, segment information, key income statement and balance sheet items, including capital commitments and contingent liabilities - Segment results show that Cathay Pacific recorded a pre-tax profit of **HKD 5.842 billion**, while HK Express recorded a loss of **HKD 524 million**[136](index=136&type=chunk) - The Board of Directors declared an interim dividend of **20 HK cents per share**, totaling **HKD 1.288 billion**[161](index=161&type=chunk) - At period-end, total approved and contracted capital commitments amounted to **HKD 97.545 billion**, with the vast majority (**HKD 96.58 billion**) for aircraft and related equipment[164](index=164&type=chunk) - Subsequent to the reporting period, the company exercised purchase rights to acquire an additional **14 Boeing 777-9 aircraft**[170](index=170&type=chunk) [Information Required by Listing Rules](index=48&type=section&id=%E6%8C%89%E4%B8%8A%E5%B8%82%E8%A6%8F%E5%89%87%E6%89%80%E9%9C%80%E6%8F%90%E4%BE%9B%E7%9A%84%E8%B3%87%E6%96%99) This section details the company's corporate governance practices, directors' interests, and major shareholders as required by the Listing Rules [Corporate Governance and Directors' Interests](index=48&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%8F%8A%E8%91%A3%E4%BA%8B%E6%AC%8A%E7%9B%8A) The company complied with all code provisions of the Corporate Governance Code during the reporting period, and no directors or chief executives held any share interests in the company or its associated corporations - The company complied with all code provisions contained in Part 2 of Appendix C1 to the Listing Rules, "Corporate Governance Code," during the reporting period[172](index=172&type=chunk) - As of June 30, 2025, none of the company's directors or chief executives held any share interests in the company or any of its associated corporations[177](index=177&type=chunk) [Major Shareholders](index=49&type=section&id=%E5%A4%A7%E8%82%A1%E6%9D%B1) As of June 30, 2025, the company's major shareholders included Swire Pacific Limited and Air China Limited, which are deemed to jointly hold 74.96% of the share interests due to a shareholder agreement, with Qatar Airways Group holding 9.99% Major Shareholder Holdings (as of June 30, 2025) | Shareholder | Holding Percentage (%) | | :--- | :--- | | Air China (Attributable Interest) | 74.96 | | Swire Pacific (Attributable Interest) | 74.96 | | Qatar Airways Group | 9.99 | [Disclaimer](index=50&type=section&id=%E5%85%8D%E8%B2%AC%E8%81%B2%E6%98%8E) This section provides a disclaimer regarding forward-looking statements contained within the report [Forward-Looking Statements](index=50&type=section&id=%E5%89%8D%E7%9E%BB%E6%80%A7%E9%99%B3%E8%BF%B0) This report contains forward-looking statements based on assumptions, estimates, and forecasts, which are subject to inherent risks and uncertainties, and actual results may differ materially due to various uncontrollable factors - The report contains forward-looking statements, and actual results may differ materially from expectations due to various risks and uncertainties[179](index=179&type=chunk)

Group 1 - Cathay Group reported that its airlines, Cathay Pacific and Hong Kong Express, carried approximately 3.2 million passengers in July, marking a new monthly high for the year [1][3] - In July, Cathay Pacific's passenger volume increased by 24% compared to the same month in 2024, with available seat kilometers rising by 30% and a load factor of 86% [3] - For the first seven months of the year, passenger volume increased by 27% compared to the same period in 2024 [3] Group 2 - The demand for air travel in July was driven primarily by long-haul travelers, including students and family visitors, in the first half of the month, while leisure travelers heading to South Korea and Southeast Asia dominated the latter half [3] - The company anticipates that the upcoming school term will boost passenger numbers in September, with the National Day and Mid-Autumn Festival holidays in October expected to stimulate leisure travel demand from Hong Kong and mainland China [3] - Cathay's cargo operations saw an 11% increase in cargo volume in July compared to the same month in 2024, with available cargo ton kilometers also rising by 11% [3] - For the first seven months of the year, cargo volume increased by 11% compared to the same period last year [3]

Group 1 - Cathay Pacific Airways reported a 24% year-on-year increase in passenger traffic for July [1] - Available seat kilometers increased by 30% year-on-year in July [1] - For the first seven months, passenger traffic increased by 27% year-on-year [1] Group 2 - Cargo volume increased by 11% year-on-year in July [1] - Available cargo ton kilometers also rose by 11% year-on-year in July [1] - For the first seven months, cargo volume maintained an 11% year-on-year increase [1] Group 3 - Cathay Pacific and Hong Kong Express together carried approximately 3.2 million passengers in July, setting a new monthly record for the year [1] - Cathay Pacific's cargo operations transported over 140,000 tons of goods in July [1] - Hong Kong Express reported a 22% year-on-year increase in passenger traffic for July 2025, with available seat kilometers increasing by 38% [1]

Core Insights - Cathay Pacific has invested over HKD 100 billion in enhancing customer experience, focusing on areas most valued by customers [18][22][24] - The airline's new strategy emphasizes being rooted in Hong Kong, backed by the mainland, and connecting globally, with significant investments in airport lounges and flight services [10][11][13] Investment in Airport Lounges - The newly upgraded lounge at Beijing Capital Airport is the third lounge to be renovated in mainland China, following upgrades in Shanghai and Shenzhen [3][11] - The lounge features a design that incorporates local elements while maintaining a consistent global standard, including a tea house and a noodle bar offering local delicacies [5][8][10] - Cathay Pacific aims to enhance customer satisfaction through these upgrades, which are seen as critical touchpoints for high-end customers [13][22] Strategic Positioning - The upgraded Beijing lounge aligns with Cathay Pacific's strategy of increasing flight frequency between Hong Kong and Beijing, with 7 daily flights and a total of 56 weekly flights between the two cities [10][11] - The airline is also expanding its network in mainland China, with 19 new flight routes announced, including 4 to mainland destinations [13][15] Employee Investment - Cathay Pacific plans to increase its cabin crew to 10,000 by 2025, with a significant portion being mainland Chinese crew members [15] - The airline is also enhancing its service by ensuring multilingual staff and encouraging crew to learn Mandarin [15] Customer Experience Enhancements - The airline has introduced a new in-flight dining series that caters to mainland Chinese tastes, featuring dishes from various Chinese cuisines [17] - Cathay Pacific has committed to improving in-flight entertainment options, including local films and shows [17][20] Future Goals - The company aims to become the world's best airline, as evidenced by its recent recognition in the Skytrax rankings, where it returned to the top three [24] - Cathay Pacific is focused on continuous investment in customer service and product enhancements to achieve its long-term vision [22][24]

Group 1: Passenger Operations - Cathay Pacific and Hong Kong Express carried approximately 3.2 million passengers in July, marking a record high for the year [1] - In July 2025, passenger volume increased by 24% compared to July 2024, with available seat kilometers rising by 30% [1] - The passenger load factor reached 86% in July, driven by demand from students and family visits in the first half of the month, and leisure travel to South Korea and Southeast Asia in the latter half [1] Group 2: Cargo Operations - Cathay Pacific's cargo volume in July 2025 increased by 11% year-on-year, with available cargo ton kilometers also rising by 11% [1] - The increase in cargo volume reflects strong demand for air freight ahead of tariff adjustments, particularly for perishables and mechanical goods from Southeast Asia to Hong Kong [2] - The "Cathay Fresh" delivery program benefited from seasonal demand for cherries from the United States, maintaining robust performance [2] Group 3: Hong Kong Express Performance - Hong Kong Express carried over 680,000 passengers in July 2025, a 22% increase compared to July 2024, with available seat kilometers increasing by 38% [2] - In the first seven months of 2025, passenger volume for Hong Kong Express rose by 32% compared to the same period in 2024 [2] - The airline continues to expand its route network, launching new routes to Guiyang and Kuala Lumpur in July and early August [2]