Cathay Pacific (HKG Stock): All set to fly again?
At the start of the year, Cathay Pacific flew to just under 30 destinations. This was down from the 100+ destinations price to the pandemic. However, Cathay Pacific is signaling optimism as they expect to double the current destination list as many Asian countries dial back their Covid restrictions.
Not as bad cash burn as expected
The Hong Kong based carrier now expects the cash burn to drop to less than $64 million a month in the next few months as the Hong Kong Government starts to roll back strict Covid restrictions. Flights from early June now include daily flights to and from London Heathrow and an increase in passenger flights to the US, New Zealand, and Australia. This is important for Cathay Pacific as the airline is wholly dependent on international travel as it has no domestic market.
Flight capacity picks up
The latest passenger figures for May show that total passenger numbers rose 141.5% y/y to around 58K. That is a good sign. Their air freight figures have also stood up in May as Covid restrictions start to ease in Shanghai towards the end of May.
So, does the pick-up in international routes, Shanghai & Beijing re-opening, and improving passenger and freight volumes signal more gains for Cathay Pacific shares? The chart shows major daily support in the region marked. This would provide an obvious area for buyers to step in and lean against. The main risk for buyers would be if Covid cases break out again heavily in China. This could impact the outlook for Cathay Pacific and change the forecast for a gradual reopening of routes over the second half of 2022.
Author
Giles Coghlan LLB, Lth, MA
Financial Source
Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.
