Ge Long Hui·2026-04-01 05:38Core Viewpoint - Cathay Pacific has raised fuel surcharges twice in March to cope with soaring fuel costs, with long-haul fuel surcharges increasing from HKD 569 to HKD 1560, which translates to approximately HKD 0.09 per available seat kilometer, affecting about 40% of the airline's total capacity [1] Group 1: Fuel Cost Impact - The airline's ticket prices for the top eight long-haul routes have increased by about 15% [1] - The bank estimates that due to approximately 30% fuel hedging disclosed by the group, the price increase can only offset about 70% of the March jet fuel price rise, which is approximately HKD 0.12 per available seat kilometer [1] Group 2: Profit Forecast Adjustments - The bank predicts that Cathay Pacific will face profit pressure later this year in a high oil price environment [1] - The forecast for average jet fuel prices in 2026 is set at USD 140 per barrel, compared to USD 86 in the second half of last year, with expectations of normalization to around USD 80 per barrel starting in the second half of 2027 [1] - The bank has revised Cathay Pacific's profit forecasts for the next two years down by 13% and 5%, to HKD 7.5 billion and HKD 8.9 billion, respectively [1] Group 3: Target Price and Rating Changes - The target price for Cathay Pacific has been reduced by 18% from HKD 13.1 to HKD 10.7 [1] - The rating has been downgraded from "outperform" to "neutral," indicating potential downside risks in valuation [1]