Cathay Pacific Airways Limited (293) Earnings Call Transcript & Summary

It's [ Cathy Chong ] here from Citi. Can we hear a bit more about your GBA strategy? You mentioned about seeing that as your extended home market. How much of that may be perhaps is included in your strategy to recover your pre-COVID capacity? Or whether you see that as more upside as well as how you see the overall competitive landscape in that area?

Sure. As I mentioned, the Greater Bay Area, the 9 cities in Mainland in the Guangdong province is one of our key focus in developing. I think overall, I would say the strategy comes with a few parts. First of all, we need to invest in our brand across the Greater Bay Area market. We have a strong brand traditionally in those markets. But as we all know, I think there's up-and-coming young population there. So some of the older people probably will remember very well about Cathay Pacific's legacy, but we need to now capture the hearts and minds of the younger audience that we have in the Greater Bay Area market. So that's number one. Number two is the connectivity between the Greater Bay Area and Hong Kong International Airport. And on that front, we've been making a lot of development, some of which I've already mentioned in my presentation. But basically, we want to connect people from GBA seamlessly by air, by sea, by land into HKIA. And our preferred mode is that they can go directly into their side of our airport so that they don't need to cross the border and enter Hong Kong, they themselves as well as their baggage. And we are making headway, as I mentioned in my earlier presentation to make the experience more seamless. And then we also want to penetrate our people and capability. In fact, in the last year or so, I think we have been expanding our team capabilities in the Greater Bay Areas. And we've got a new office, a start-up style office in Shenzhen as our GBA head office. So we want to treat also the Greater Bay Area as our extended home head office as well. So we're going to be paying a lot more visits into the Greater Bay Area as if they are our home -- head office as well. I do believe that the Greater Bay Area market will both help us in our rebuild towards our pre-pandemic capacity because they are a big source of demand for us and as well as a driving force for upside post 3-runway system to support the demand side for the longer-term future as well. So therefore, I think we are very focused in capturing that market for us, both in the short run as well as in the long run. Yes. Thank you.

Ronald, thank you. So perhaps we can switch to the questions from our webcast audience. So first question from HSBC. What is the view on the bridge loan from the Hong Kong government? And what is the view on the dividend distribution and potential redemption of the preference shares? Ronald, please?

Yes. Thank you. Well, first of all, once again, I would like to express our deep appreciation for the Hong Kong government support to us over the pandemic. In particular, the recapitalization plan back in 2020 was very important for our business to keep going throughout the pandemic. In terms of the preference share, we have every intention when our operations allows, we will redeem the preference share in full. And in terms of the dividends for the preference share, as we all know, we now have accumulated up to HKD 1.5 billion outstanding dividend payment. And we have intention and plan to pay up to the preference share dividend within this year. So I think we have to see. But with the positive momentum we have seen in our business, we are more confident about being able to repay the preference share as well as the dividend in the coming years. Thank you.

Okay. Thank you. We've got a question from DBS and actually similar questions from Citigroup as well. So let's address them together. So the question is basically, can you shed more colors on the passenger yield outlook? And do you see the mix between leisure and corporate changing going forward? Thank you.

Well, it's still early days because Hong Kong only opened up in the fourth quarter of last year, and Chinese Mainland only opened up in first quarter of this year. So the situation is still a bit dynamic. But personally, I'm confident that both the corporate and leisure travel will return. And judging from the trend in the last few months, definitely, I think we see very strong demand both for business travel as well as for leisure travel. But it's yet to be seen whether this is due to the pent-up demand or this is a business-as-usual kind of demand moving forward. So I think it's a bit early to say. But within Cathay Pacific, we are focusing on rebuilding our network as soon as possible so that the ticket price level can return to more of a normal level. And for example, on our most popular long-haul route, London Heathrow, by summer season, starting end of this month into next month, we will rebuilding back to pandemic frequency already, flying from Hong Kong to London Heathrow of around 5 daily frequencies already. So we're rapidly rebuilding our capacity so that the supply and demand can be rebalanced so that ticket price can go back to normal levels as soon as possible. Thank you.

Thank you. Ronald, thank you. Okay. Well, I think that's all the time we have. So thank you to our speakers, and thank you for all your questions. So this concludes our briefing for today. A copy of the presentation slides has been sent to you via e-mail and will also be available for download on our Investor Relations page website later on. If you have further questions, please e-mail them to ir@cathaypacific.com. Thank you very much for joining us. Have a good day.