Core Insights - Cathay Pacific Airways reported encouraging performance in January and February 2026, driven by the Lunar New Year travel peak, with a record single-day passenger count of approximately 128,000 on February 14 [1] - The airline and Hong Kong Express carried over 3.2 million passengers in February, representing a 24% increase compared to the same month last year [1] - The geopolitical situation in the Middle East has led to unexpected changes in passenger and cargo flows, prompting the airline to suspend flights to Dubai and Riyadh until April 30, 2026 [1] Passenger Traffic - In February 2026, Cathay Pacific's passenger volume increased by 24% compared to February 2025, with available seat kilometers rising by 16% year-on-year [1] - For the first two months of 2026, passenger volume increased by 17% compared to the same period in 2025 [1] - Hong Kong Express recorded over 730,000 passengers in February 2026, a 25% increase from February 2025, with available seat kilometers increasing by 14% [2] - For the first two months of 2026, Hong Kong Express's passenger volume increased by 16% compared to the same period last year [2] Cargo Traffic - Cathay Pacific's cargo volume in February 2026 increased by 7% compared to February 2025, with available cargo ton kilometers rising by 4% year-on-year [2] - For the first two months of 2026, cargo volume increased by 6% compared to the same period last year [2]

Core Viewpoint - Cathay Pacific has achieved record performance in its 80th anniversary year, with revenue of HKD 116.77 billion and a net profit of HKD 10.83 billion, marking a significant recovery from previous losses during the pandemic [1][6]. Financial Performance - In 2025, Cathay Pacific's revenue grew by 11.9% year-on-year, while net profit increased by 9.5% [1]. - The company reported a cumulative net profit exceeding HKD 30 billion over three consecutive years, a remarkable turnaround from a loss of approximately HKD 30 billion during the pandemic [6][8]. - Passenger revenue contributed HKD 72.45 billion, a 15.8% increase, with a passenger volume of 28.9 million and a seat load factor of 85.2% [7]. - Cargo revenue reached HKD 24.28 billion, with a 1.2% increase and a cargo volume of 167.7 thousand tons, up by 9.5% [7]. Strategic Initiatives - The company is focusing on enhancing its operational efficiency and employee morale, which has reached a historical high, contributing to improved customer service and financial results [7][8]. - Cathay Pacific plans to increase passenger capacity by 10% in 2026, adding new routes and increasing flight frequencies [8]. - The company is actively expanding its presence in the mainland market, operating 24 points with approximately 330 round-trip flights weekly [10]. Cost Management and Organizational Efficiency - In response to external pressures such as rising fuel costs and geopolitical instability, Cathay Pacific is implementing a "slimming" plan to optimize costs and improve organizational efficiency [5][16]. - The company aims to maintain a fuel hedging ratio of 30% to mitigate the impact of fuel price volatility [16]. - Cathay Pacific is focusing on enhancing frontline services while reducing administrative overhead, with a 35.8% increase in onboard service and passenger spending [18]. Future Outlook - The company is committed to investing over HKD 100 billion in new aircraft, with plans to introduce more than 100 new planes in the coming years [19]. - Cathay Pacific's strategy emphasizes quality and service over price competition, reflecting its commitment to excellence in the aviation industry [21].

Core Viewpoint - China Eastern Airlines (600115.SH) reported significant growth in passenger and cargo metrics for February 2026, indicating a strong recovery and operational performance in the aviation sector [1] Group 1: Passenger Metrics - The passenger capacity input (measured in available seat kilometers) increased by 12.79% year-on-year for February 2026 [1] - The passenger turnover (measured in revenue passenger kilometers) rose by 14.68% year-on-year [1] - The passenger load factor reached 86.54%, an increase of 1.42 percentage points year-on-year [1] Group 2: Cargo Metrics - The cargo and mail turnover (measured in cargo mail ton kilometers) saw a significant increase of 33.88% year-on-year for February 2026 [1]

Core Viewpoint - China National Airlines (601111.SH) reported significant growth in passenger turnover and capacity for February 2026, indicating a strong recovery in both domestic and international travel demand [1] Group 1: Passenger Operations - The company's passenger turnover (measured in revenue passenger kilometers) increased by 19.1% year-on-year [1] - Passenger capacity (measured in available seat kilometers) rose by 13.8% year-on-year [1] - Domestic passenger capacity increased by 13.3%, with a turnover rise of 16.9% [1] - International passenger capacity grew by 14.0%, with a turnover increase of 23.7% [1] - Regional passenger capacity surged by 25.4%, with a turnover increase of 37.1% [1] - The average passenger load factor reached 85.9%, up by 3.8 percentage points year-on-year [1] - Domestic routes saw a load factor increase of 2.7 percentage points, international routes increased by 6.5 percentage points, and regional routes rose by 6.8 percentage points [1] Group 2: Cargo Operations - Cargo capacity (measured in available cargo ton kilometers) increased by 11.5% year-on-year [1] - Cargo and mail turnover (measured in revenue cargo ton kilometers) rose by 21.4% year-on-year [1] - The cargo load factor was 32.4%, up by 2.6 percentage points year-on-year [1] Group 3: Fleet Information - The company introduced one B737 series aircraft and retired one A320 series aircraft in February 2026 [1] - As of the end of February 2026, the company operated a total of 960 aircraft, including 423 owned, 247 under finance leases, and 290 under operating leases [1]

Core Viewpoint - Bank of America Securities reports that Cathay Pacific (00293) is expected to exceed market consensus for net profit in 2025, primarily due to a one-time settlement gain from HAECO and reduced interest costs from last year's rate cuts [1] Group 1: Financial Performance - The expected net profit for Cathay Pacific in 2025 is bolstered by a one-time settlement gain from HAECO and a decrease in interest costs due to last year's rate cuts [1] - Unit revenue and unit costs are largely in line with Bank of America's expectations [1] Group 2: Operational Outlook - Cathay Pacific aims for a 10% growth in passenger capacity by 2026 [1] - The cargo business has had a strong start in the first two months of 2026 [1] Group 3: Risks and Ratings - Rising fuel costs present a risk, with approximately 30% of Brent crude oil usage for Q1 2026 already hedged [1] - Bank of America maintains a "underperform" rating for Cathay Pacific, indicating that the spread risks in passenger and fuel costs have not yet been reflected in the stock price [1] - The target price for Cathay Pacific is set at HKD 10.9 [1]

Investment Rating - The report assigns a rating of "Accumulate-H" to Cathay Pacific Airways (00293.HK) with a current price of HKD 13.17 and a fair value of HKD 14.0 [9]. Core Insights - The company's earnings exceeded expectations, driven by a recovery in passenger demand and one-time gains, resulting in a net profit of HKD 10.828 billion for 2025, a year-on-year increase of 9.5%. Revenue reached HKD 116.766 billion, up 11.9% year-on-year. Passenger and cargo revenues were HKD 78.85 billion and HKD 27.57 billion, respectively, reflecting increases of 15.0% and 0.6% [9]. - Operational metrics showed significant recovery, with passenger numbers rising to 28.871 million, a 26.5% increase year-on-year. The ASK/RPK metrics increased by 25.8% and 28.9%, respectively, with a load factor improvement of 2 percentage points to 85.2% [9]. - The recovery in capacity led to an increase in operating costs, with total expenses rising by 11.8% year-on-year. Key cost components such as fuel, employee, and landing fees increased by 10.9%, 19.2%, and 22.7%, respectively. However, the unit cost per ATK decreased by 1.7% to HKD 2.32 due to improved aircraft utilization [9]. - Future profit forecasts estimate net profits of HKD 9 billion, HKD 11.7 billion, and HKD 12.561 billion for the years 2026, 2027, and 2028, respectively, with a target price based on a 10x PE ratio for 2026 [9]. Financial Summary - Revenue projections for the upcoming years are as follows: HKD 104.371 billion for 2024, HKD 116.766 billion for 2025, HKD 131.593 billion for 2026, HKD 136.044 billion for 2027, and HKD 143.379 billion for 2028, with growth rates of 10.5%, 11.9%, 12.7%, 3.4%, and 5.4% respectively [5]. - The EBITDA figures are projected to be HKD 26.516 billion for 2024, HKD 26.999 billion for 2025, HKD 26.835 billion for 2026, HKD 30.504 billion for 2027, and HKD 32.868 billion for 2028 [5]. - The earnings per share (EPS) are expected to be HKD 1.54 for 2024, HKD 1.68 for 2025, HKD 1.40 for 2026, HKD 1.82 for 2027, and HKD 1.95 for 2028 [5].

Investment Rating - The report maintains a "Buy" rating for Cathay Pacific Airways [6] Core Views - Cathay Pacific Airways reported a revenue of HKD 116.77 billion for 2025, an increase of 11.9% year-on-year, and a net profit attributable to shareholders of HKD 10.83 billion, up 9.5% year-on-year [1] - The company exceeded expectations by HKD 8.6 billion, primarily due to strong passenger performance in the second half of 2025 and non-recurring income of HKD 0.88 billion [1] - The outlook for 2026 is optimistic, with expectations of a significant narrowing of revenue decline due to decreasing supply growth and plans to introduce 25 new aircraft by 2027, increasing fleet capacity by 10.5% [1][5] Summary by Sections Passenger Transport - In the second half of 2025, Cathay Pacific's capacity increased significantly, with ASK/RPK rising by 25.4%/27.9%, reaching 90%/95% of 2019 levels [2] - The passenger load factor improved to 85.6%, up 1.7 percentage points year-on-year, while unit revenue per passenger kilometer saw a reduced decline of 8.2% [2] - Total passenger revenue for the group reached HKD 41.64 billion, a 17.0% increase year-on-year [2] Cargo Transport - Cargo revenue remained stable, with AFTK/RFTK increasing by 8.5%/6.6%, although the load factor decreased by 1.0 percentage points to 58.9% [3] - The overall cargo revenue for the group was HKD 14.81 billion, remaining flat year-on-year [3] Financial Performance - Operating costs for the second half of 2025 were HKD 54.31 billion, up 14.3% year-on-year, but unit non-fuel ATK costs decreased by 2.4% due to improved aircraft utilization [4] - The operating profit margin declined by 0.8 percentage points to 13.7% year-on-year, but net profit attributable to shareholders increased by 15.1% to HKD 7.18 billion [4] - The company announced a total dividend of HKD 0.84 per share, with a payout ratio of 48% [4] Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2026 and 2027 has been raised by 6% and 14% to HKD 9.23 billion and HKD 10.04 billion, respectively [5] - The target price has been adjusted to HKD 17.00, reflecting an increase in valuation to a 2026E PB of 1.8x [5]

Core Viewpoint - Cathay Pacific Airways (00293.HK) reported an annual performance for the year ending December 31, 2025, with total revenue of HKD 116.766 billion, representing a year-on-year increase of 11.9% [1] Financial Performance - The company's profit attributable to shareholders for the period was HKD 10.828 billion, reflecting a year-on-year growth of 9.5% [1] - Basic earnings per share were HKD 1.655, with a proposed second interim dividend of HKD 0.64 per share [1] Revenue Breakdown - Passenger revenue for 2025 reached HKD 72.454 billion, marking a year-on-year increase of 15.8% [1] - Cargo revenue for 2025 was HKD 24.279 billion, showing a modest growth of 1.2% [1] - Hong Kong Express recorded passenger revenue of HKD 6.394 billion, which is a year-on-year increase of 6.7% [1] Non-Recurring Income - The profit for 2025 includes a non-recurring gain of approximately HKD 0.878 billion from a settlement agreement with Hong Kong Aircraft Engineering Company (HAECO) related to an aircraft parts management joint venture, classified under other income [1]

Core Insights - Guangzhou Baiyun Airport has achieved a record-breaking passenger flow during the Spring Festival travel season, becoming the first airport in the country to exceed 5 million passengers [1] Group 1: Passenger Traffic - On February 21, the 20th day of the Spring Festival travel season, Baiyun Airport recorded 1,676 flight takeoffs and landings, serving 277,600 passengers, and handling 4,154.14 tons of cargo and mail, representing year-on-year increases of 7.37%, 9.12%, and 9.1% respectively [1] - Since the start of the Spring Festival travel season on February 2, Baiyun Airport has cumulatively transported 5.2785 million passengers, marking a significant milestone in passenger traffic [1]

Core Insights - Emirates SkyCargo has announced the addition of Liège Airport (LGG) in Belgium to its cargo network, marking its first dedicated cargo destination for 2026 and plans for significant expansion in the next 12 months [1][3] Group 1: Service Expansion - Emirates SkyCargo will operate five weekly scheduled cargo flights to Liège, responding to the sustained growth in demand that previously only allowed for temporary flight services [3][6] - The new service will increase cargo capacity by 500 tons per week, facilitating the efficient transport of goods [6] Group 2: Strategic Importance - Liège Airport is strategically located in the "Golden Triangle" of Amsterdam, Paris, and Frankfurt, making it one of the fastest-growing cargo hubs globally, with a 14% increase in cargo throughput in 2025 [6] - The scheduled flights will connect Liège with Chicago O'Hare International Airport and Dubai's Al Maktoum International Airport, focusing on temperature-sensitive pharmaceuticals and e-commerce goods [6][7] Group 3: Business Growth and Partnerships - Emirates SkyCargo's European Vice President, Khawla Abdulla, highlighted the strategic significance of adding Liège to their network, enhancing connectivity for global customers [7] - The partnership with Liège Airport is expected to solidify its position as a leading cargo hub in Europe, particularly in pharmaceuticals, perishables, and express services [7]