Cathay Pacific Warns of Falling Fares and Cargo Risks

Post by : Monika

Photo: Reuters

In early August 2025, Cathay Pacific, the biggest airline based in Hong Kong, shared its financial results for the first half of the year. The company earned HK$3.65 billion, which is about $465 million. That’s a 1% increase compared to the same period last year.

This small gain came mostly because more people flew with the airline, fuel prices were cheaper, and cargo shipping stayed steady. However, even with this profit, there were warning signs that the airline may face some trouble in the coming months.

Ticket Prices Are Falling
One of the biggest concerns for Cathay is the sharp drop in ticket prices. For Cathay’s main airline, airfares went down by 12.3%. Its budget airline, HK Express, saw an even bigger fall—about 21.6%.

The reason? More airlines are now flying to and from the same places, meaning greater competition. With more seats available but not enough passengers, airlines are lowering prices to fill planes.

This has made it harder for Cathay to earn as much money per passenger as before. And it’s hitting their budget brand even harder.

HK Express Reports a Big Loss
HK Express, which is owned by Cathay, is still struggling. The airline reported a loss of HK$524 million in the first half of the year. That’s a huge loss for a company that needs to be low-cost to survive in a crowded market.

Even with these losses, Cathay’s leadership says they’re not giving up. The company believes that HK Express can return to profit by becoming more efficient and growing its routes wisely. They say it’s part of a long-term plan.

Shares Drop Over 10%
After releasing its financial report, Cathay's share price fell by more than 10%. That’s the biggest one-day drop in its stock value since early 2008. This sharp fall shows that investors are worried about the airline’s future.

This drop happened even though the wider Hong Kong stock market was slightly up that day. The fall in Cathay’s shares stood out and raised questions about how the company will deal with dropping ticket prices and other challenges.

Cathay Still Strong in Cargo—but There’s Pressure
Cathay is also known for being a major player in air cargo. It ships goods all over the world, using Hong Kong as a hub. In the first half of 2025, its cargo revenue went up 2.2%, reaching HK$11.1 billion.

But there’s a catch. Even though the company made more money overall from cargo, the money made per shipment (called yield) actually fell by 3.4%. This is because demand has weakened, and more airlines are offering cargo services, leading to tighter competition.

U.S. Trade Changes Impact Cargo Business
One of the reasons cargo is under pressure is because of a change in U.S. trade policy. In May 2025, the U.S. ended a rule that allowed small packages from China and Hong Kong to enter the country without duties (taxes).

This duty-free rule had helped boost e-commerce shipping in the past. With that rule gone, demand for small-package shipping has dropped. This has hit Cathay’s cargo business, since many of those goods used to be flown on their planes.

To adjust, Cathay is now changing some of its cargo routes, focusing more on regions where demand is still strong.

Large Aircraft Order Despite the Challenges
Even with these difficulties, Cathay is investing in its future. The airline recently ordered 14 more Boeing 777‑9 airplanes, bringing its total order to 35 aircraft. There’s also an option to buy 7 more later on.

If you count the full list price of these planes, the deal is worth around $8.1 billion. But Cathay expects to pay less because big buyers usually get discounts.

The first of these new planes should be delivered in early 2027, with the rest arriving by 2034. These planes will help Cathay modernize its fleet, making it more fuel-efficient and able to carry more passengers.

Why Are Airfares Dropping So Fast?
After the pandemic ended, airlines all around the world started adding more flights and bringing planes back into service. But while supply increased, demand didn’t grow as fast—especially in Asia.

Places like Hong Kong and China were slower to fully reopen compared to Europe and North America. So, while seats are available, many planes are flying less full, and that pushes prices down.

Cathay also said that its passenger load factor—which is a measure of how full its planes are—is lower than in past years. That makes it harder for the airline to earn enough from each flight.

Global Trade and Tariffs Are Adding Pressure
Cathay’s cargo business is also dealing with changing trade rules and new tariffs, especially from the U.S. These changes affect how many goods are being shipped—and by what method.

In the past, many small goods from online shopping sites were sent from China or Hong Kong to the U.S. without any import tax. That led to a big rise in e-commerce cargo.

Now that those tax breaks are gone, fewer of those packages are being flown. This has caused cargo demand to weaken, which affects prices and profit.

Cathay’s Leaders Remain Hopeful
Despite all these challenges, Patrick Healy, the chairman of Cathay Pacific, said the airline is committed to growth. He admitted that HK Express is in a tough spot, but believes the problems can be fixed.

He said the company is focusing on becoming more efficient, and on improving the way it runs operations. Cathay’s main airline is still doing better than the budget brand, and that is helping balance things for now.

The Bigger Picture in Asia’s Airline Industry
Cathay isn’t the only airline facing these problems. Across Asia-Pacific, many carriers are seeing slower passenger and cargo growth.

As governments relax travel rules and supply chains settle down, airlines have brought back more planes. But passenger demand hasn’t fully returned, especially in regions where travelers are still cautious or where the economy is weak.

Even big names like Singapore Airlines have seen a drop in ticket prices—around 3 to 4%. So the struggles that Cathay faces are also being felt by its rivals.

What’s Next for Cathay Pacific?

• In the months ahead, Cathay Pacific plans to take several steps to deal with its challenges:
• Improve fare pricing by adjusting its routes and flights to match demand
• Move cargo aircraft to stronger markets where demand is still high
• Receive and deploy new planes to lower fuel costs and improve passenger service
• Work on turning HK Express around and making it profitable again
• Keep an eye on global trade rules, especially those affecting air cargo and tariffs

What’s Happening

• Profit    Slight growth (1%), with HK$3.65B in first-half earnings
• Airfares    Dropped by 12.3% for Cathay, 21.6% for HK Express due to high competition
• Stock Price    Fell over 10%—biggest one-day drop since 2008
• HK Express    Lost HK$524 million; leadership says it has a long-term plan to fix it
• Cargo    Revenue rose 2.2%, but cargo yields fell 3.4%; trade changes added pressure
• Aircraft Order    Ordered 14 more Boeing 777‑9 jets to expand and modernize the fleet
• Industry Trends    Other Asian airlines also struggling with fare pressure and cargo softness

Cathay Pacific is going through a tough period. Although it made a small profit, the sharp fall in airfares, growing cargo troubles, and worries over trade policy are big concerns.

Hong Kong airline