Group 1 - The core profit of Cathay Pacific (00293) for the second half of the year reached HKD 6.1 billion, representing a year-on-year increase of 7% [1] - Excluding contributions from joint ventures, the core profit was HKD 5.4 billion, which is a 43% increase compared to the first half and an 8% year-on-year growth [1] - The full-year performance met 107% and 108% of Citigroup and market forecasts, respectively [1] Group 2 - Citigroup maintains a "sell" rating for Cathay Pacific, primarily due to weak growth in outbound tourism from China, setting a target price of HKD 11.2 [1] - Prior to the escalation of tensions in the Middle East, Cathay Pacific reported strong passenger load factors for long-haul flights, with a surge in short-term demand for routes to Europe and Australasia [1] - The airline has hedged 30% of its expected fuel consumption for 2026 at a price of USD 70 per barrel, exposing it to risks from widening fuel crack spreads [1] Group 3 - If spot aviation fuel prices rise by USD 10 from USD 78 per barrel, Cathay Pacific would need to increase passenger unit revenue by approximately 10% in Europe, Australasia, and South Asia to offset the impact of rising fuel costs [2] - For essential travelers, this price increase is feasible in the short term (1-2 months), but the global ticket price demand elasticity is -0.87, indicating that price hikes could lead to a decrease in travel demand [2]

Core Insights - The global air cargo market showed a year-on-year growth of 2.9% in September 2025, with international business growing by 3.2% [1] - Capacity increased by 3.0% year-on-year, with international capacity growing by 4.4% [1] - The air cargo demand has been growing for seven consecutive months, indicating a significant adjustment in global trade patterns influenced by U.S. tariff policies [1] Air Cargo Market Performance - Global cargo trade increased by 3.7% year-on-year in August [1] - Despite a decline in oil prices, aviation fuel prices rose by 5.4% in September due to tightening in the diesel market [1] Regional Performance - Asia-Pacific airlines experienced a 6.8% increase in air cargo demand, with capacity up by 4.8% [4] - European airlines saw a 2.5% increase in demand and a 4.4% increase in capacity [4] - North American airlines faced a 1.2% decline in demand and a 1.5% decline in capacity [4] - African airlines led with a 14.7% increase in demand and a 7.4% increase in capacity [4] Trade Route Analysis - The Asia-North America route declined by 3.5%, marking five consecutive months of decrease [5] - The Europe-Asia route grew by 12.4%, continuing a 31-month growth trend [5] - The Middle East-Asia route increased by 4.6%, marking seven months of growth [5] - The intra-Asia route grew by 10.0%, continuing a 23-month growth trend [5]