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

Good afternoon. Welcome to Cathay Group's 2025 Annual Results Analyst Briefing. My name is Andy Wong, General Manager, Corporate Affairs for Cathay. Whether you're attending here in person or online, it is a pleasure to see you all, and thank you for joining us. Introducing our speakers for today, Chief Executive Officer, Mr. Ronald Lam; Chief Financial Officer, Ms. Rebecca Sharpe. We'll begin the presentations by Ronald and Rebecca, after which we'll open the floor to questions. The slides and video recording of today's briefing will be available for download on our Investor Relations page after the briefing. Without further ado, let me invite Ronald to start the presentation. Ronald, please.

Good afternoon, everyone. Very happy to see all of you here. The first part, I would just give a brief overview on what we have achieved in the last 3 years and then how we're going to move forward for the next 5 years. And first of all, I would like to show you this time horizon is the journey we've gone through in recent years, starting with 2020 to 2022. Of course, those were the COVID-19 years. And during those 3 years, we fought hard to survive and we did. And we also took the opportunity to transform many aspects of the Cathay Group so that when the pandemic was over, we could come out stronger than before. So Survive and Thrive. And it was probably the worst 3 years of our history over the past 80 years. And I think I'm so glad that is now well behind us. And after that, 2023 to 2025, another 3 years where we spent our efforts rebuilding from the pandemic as well as investing in the future. Thanks to the opening of the Three Runway System at the end of 2024, it provided us with a major opportunity for growth, and that's what we did in the last 3 years. And last 3 years, I would say, was probably the best 3 years in our Cathay history. So we had the worst 3 years and then followed by the best 3 years. So quite a mirror image. And at the airline plus subsidiary level, I would say the loss we made in the worst 3 years is now fully recovered by the best 3 years already. So I think it's almost like a perfect mirror image. Now we are into a new era. The next planning period for us is 2026 to 2030. The next 5 years is how we look at things. And 2026 is a new beginning, of course, and we are turning 80 years old. So it's a very special year from that regard. And these 5 years, there are also 2 themes. We need to sustain our success over the past 3 years. How can we make it consistent moving forward? How can we sustain our high performance into the next 5 years is one thing. There are certain areas, although we've made progress in the last 3 years, but we are still not where we want it to be. So there are areas, especially when it comes to our customers, we still need to improve and further elevate customer experience is the focus areas. So on the one hand, I think we will consolidate over the success we had over the last 3 years. On the other hand, I think we'll make further progress in other areas so that I think we can climb another peak in the next 5 years. So that's briefly our time history. So first of all, I would like to spend a little bit of time to sum up the last 3 years, 2023 to 2025. And our philosophy by the leadership team is very simple. Everything starts with our team because we believe happy team will lead to happy customers and happy customer would then lead to profitable business. This is our leadership philosophy. And therefore, in the last 3 years, we've spent a lot of time engaging with our team, listening to their concerns and then put out concrete actions to act on their concerns. As you can see, we use one very important indicator to measure our morale and sentiment, which is team Net Promoter Score. And over the last 3 years, we have moved from the negative zone in 2023, gradually climb up to the positive zone, and then we ended 2025 at a historical high when it comes to our morale and sentiment. And the same has been sustained, by the way, into 2026. I would say whether it's our pilot cabin crew, our frontline ground employees or office-based employees across all groups, we've seen major uptick in terms of team Promoter Score. Very happy to see that. And with happy team, we've also seen uptick on our customers' satisfaction. We use, again, a very simple overall indicator, which is customer Net Promoter Score to measure our customer satisfaction. We've made progress. We moved from positive 20-something to 30-something over the past few years. And each year, we have an uptick. But we're not satisfied with that. Actually, our target is to reach positive 40. We haven't quite done that. And as I mentioned, happy customer is the area we want to further elevate in the coming years. Profitable business. This is not just for our shareholders. It is important that we maintain and achieve profitable business so that we can invest back into our own team as well as invest back into our customers. And from that perspective, I think we've done really, really well, 3 consecutive years of financial success consistently over the past 3 years. From a consolidated profit angle, we make pretty much $10 billion on average in the last 3 years. And this is an unprecedented performance over a 3-year period. I think it's the high level of profit as well as the consistency of the profit. A golden measure we use to measure our financial success is return on capital employed. And also from that perspective, we have exceeded 10% for 3 consecutive years. In my 30 years career with Cathay, I've never seen this. And certainly, this is an unprecedented result as well from that perspective. So to sum up, I think from a happy team and profitable business, it's probably the best ever achievement, and we need to sustain that. Customer -- happy customer front, we still have more work to do, although we have made great progress over the last 3 years, but we still want to elevate -- further elevate experience for our customers in the coming years. In terms of we're building over the past 3 years, there's a quantitative perspective. There's also a qualitative perspective. Firstly, we're building quantitatively. We have built back our capacity in 2025 already. In fact, last year, 2025 was a record year when it comes to us launching new destination. Between Cathay Pacific and HK Express, we launched 20 new destinations as listed on this slide last year, and it was a record. And these new destinations has brought us to exceed 100 destinations worldwide at the end of last year. And in terms of both passenger and cargo capacity by any measure, whether it's ASK, whether it's frequency, we have exceeded our pre-pandemic level already by end of last year. Equally important, we are to -- we build qualitatively as well. And we have been recognized over the past few years, in particular, in 2025 by many industry ranking and awards. On the Cathay Pacific front, we've been recognized by Skytrax as one of the top 3 airlines of the world. And in 2 specific categories, i.e., in-flight entertainment, as well as our economy class is being rated the world's best. Cargo has been recognized by ATW in 2 times in the last 3 years as the Cargo Operator of the Year. So we are firmly a leading air cargo carrier of the world from a quality angle. And HK Express has been recognized by AirlineRatings last year as one of the top 5 low-cost carrier of the world. So we are very happy that across our 3 airlines, we've been recognized as one of the world leading ones. We won't stop there. I think our vision is very simple. We want whether it's Cathay Pacific, Cathay Cargo, HK Express to be the world's best. And we still have more work to do, but I think we are in a good position to build on. Looking forward, the next 5 years, 2026 to 2030 will be another new era for the Cathay Group. And to guide our development in the next 5 years, among the leadership team, we have refreshed our strategy on the page, which will guide us forward in the next 5 years. As you can see, our strategy on the page comes in 3 languages, English, traditional Chinese and simplified Chinese. This is a reflection of our unique position, deep roots in Hong Kong, proudly part of China, connecting the world. We are Hong Kong. We are part of China, and we are very also very international. So this is our internally what we call a tripod position. And our overall Cathay Group vision for the next 5 years is that we want to become our customers' most loved service brand. We are not just comparing ourselves with other airlines. We want to be able to compare us with any service brand that our customers get into touch with, and we want to be among their most loved service brand. And across the 4 lines of business, as I mentioned, in turn, we want to be the world's best. Cathay Pacific, we want to become the world's best premium airline. We are now world's top 3 already. And then Cathay Cargo, we want to keep it that way that we are the world's best air cargo carrier. For HK Express, our ambition is to become Asia's best LCC low-cost carrier. And for Cathay Lifestyle, we want to be the world's best premium travel lifestyle brand. Very ambitious target, but as shown in the last few years, we are making good progress, and we are on track in moving towards this vision in the coming years. The leadership philosophy, I explained for the last 3 years will continue into the next 5 years. This philosophy has proven to be sound and practical. We will always focus on our team first. And once our team are motivated, happy, they will make our customers happy. Once the customers are happy, they're more willing to choose us over other choices they might have, which will lead to profitable business. And of course, within profitable business, we have work to do to make sure that we have the best revenue efficiency, we have the best cost efficiency, and that will continue to be the focus for the next 5 years. A few highlights in terms of our development for the next few years, starting with our fleet. So this year, we'll be taking delivery of 8 aircraft, and they are all belonging to the narrow-body family, A320 and A321neo. And then in the coming years from 2027, we'll be taking quite a few more such aircraft. And then in 2027, around second half of next year, we'll be taking delivery of our new generation long-haul fleet, 777-9 will finally arrive, and it will also come with our new generation first-class products on that new fleet. So with the new fleet, we will continue to expand to more long-haul destination and more long-haul frequencies from second half of next year. And then come 2028, we'll take delivery both on the freighter side as well as the regional wide-body side. So freighter will be taking our first A350 freighter from 2028. And then our first A330-900, also known as A330neo aircraft will also arrive in 2028. Altogether, we have more than 100 new generation aircraft coming our way in the coming years. This is part of our HKD 100 billion investments into the future. A majority of our investment will be spent on our fleet, modernizing our fleet. Not only that, we'll continue to upgrade our cabin products, which are very important to our customers. So already starting last year, we have been rolling out new cabin products on our 777-300ER with the now world-famous Aria Suite, new business class products as well as our new generation premium economy class products on our 777-300ER fleet. Currently, we have 14 of such aircraft retrofitted. And altogether, we will have 35 of them. So there will be more retrofitted aircraft coming out this year and next year on our 777. Later this year, we have another hero product, which will be for our regional fleet. A330-300, also known as A330ceo aircraft will be equipped with brand-new business class as well. We are calling it Aria Studio. This is a sister product to Aria Suite. And this is a lie-flat business class seat for our regional fleet. Also, each seat would have direct aisle access because it will be in a 121 configuration. So our customers will be -- will find it very convenient that each seat will be given aisle access. So we'll continue to roll out throughout the next 2 years, starting end of this year, we'll see the first of such retrofitted aircraft. And then next year, as I mentioned, the hero product is our 777-9 first-class cabin. We'll be introducing our new generation first-class cabin for coming with the 777-9 in the second half of next year. So each year, I think we are rolling out a new set of cabin products on different fleet. On the ground, we will continue to upgrade our lounges worldwide. And starting with Hong Kong, the Wing first lounge has been under renovation for quite a few months, and I'm glad to share that we're going to reopen very soon, in April is the plan that we'll open this lounge. And this will be our new generation first-class lounge that our members and customers would have been looking forward to. So I'm also very excited to see the new lounge myself. Later this year, for the first time ever, we'll be having our own Cathay Pacific flagship lounge in New York JFK Airport for the first time. Again, a very exciting project that I look forward to experiencing the new lounge by myself. On the cargo front, our strategy is to provide value that other providers cannot match. Our tagline is that we know how. We ride on our expertise in shipping special shipments for our customers, whether they are time sensitive, temperature-sensitive or handling sensitive, we are the expert. Cathay Cargo has been recognized as the expert within the industry in handling such kind of special cargo that requires special skill arrangement. We also want to excel on our digital leadership for Cathay Cargo. There are different initiatives to improve customer experience, operational efficiency using digital technology within cargo. Our lifestyle business will continue to focus on 2 areas: our mileage sales business as well as product sales. Our mileage sales, Asia Miles currency has been very popular in Hong Kong and in Taiwan, for example. And our focus moving forward is to strengthen Asia Miles presence in the Chinese Mainland, in particular, the Greater Bay Area cities. On the product business side, we will focus on Cathay Shop, Cathay Holiday as 2 very important pillar. So taking the chance of the 80th anniversary, we'll be launching many special edition Cathay branded merchandise. So I think some of you would have seen it outside on display. So a very exciting year for us. So speaking of 80th anniversary, I have a short video to share with you, which feature our special livery aircraft, what we call lettuce leaf sandwich aircraft. We have 2 of such aircraft, one on the passenger side using our A350 aircraft and one on the cargo side using our 747 freighter. So enjoy the video. [Presentation]

How many of you would have seen those 2 aircraft? No. Okay. You'll be lucky to see them because they've been flying busy flying through the world. And I think many, many pictures and social media posts have been created because of them over the last 2 months. And not only that, those 2 aircraft are more looking back, right, to celebrate our heritage and history. This Monday, we've unveiled a more future-looking aircraft with what we call the Spirit of Hong Kong with a special Hong Kong artist design artwork on this plane. And it's been flying across the world to promote Hong Kong arts and culture as well as the Spirit of Hong Kong. And this one is the fifth generation Spirit of Hong Kong aircraft already. The first one we introduced back in 1997 during the handover. And then since then, this is the fifth generation. Starting March, we are also launching Vintage Uniform Show on our aircraft. So chances are when you take our flights this month onwards until end of the year, you will spot some of our cabin crew in vintage uniform. And also across the airport, we will have some of our frontline employees wearing this vintage uniform from the past many decades. Last, but not the least, as I mentioned, on the lifestyle side, we are also launching many new and creative Cathay branded merchandise to celebrate 80th anniversary. So that concludes my presentation, and let me pass the time to our CFO, Rebecca, to walk you through the numbers. Thank you.

Thank you, Ronald, and good afternoon, everyone. I have to say, I was remembering that the very first analyst briefing I did, I was talking about double-digit losses. So it's really exciting to me today to be talking for the first time about double-digit profits. So -- and as Ronald has explained, off the back of 3 consecutive profitable years. So as normal, I will follow a similar presentation that we've done before. I'll talk a bit about the financial highlights and then something about the -- some of the key business statistics, more of the operational statistics and then a bit about outlook to wrap up before we move to Q&A with Ronald and myself. So let's get started. This slide, you will be familiar with it. We've got some of the key 6 sort of top numbers that we refer to. I will cover some of these through the course of the presentation. So the one I just want to draw attention to here is around our revenue. So at GBP 116.8 million, almost GBP 117 billion, fascinating fact for you. This is the highest revenue number we've ever generated in our 80-year history. So this was a real milestone for us in 2025. This slide covers the consolidated profit, but we split it out at a number of levels. So you can see some of the buildup. And looking back over the 3 years to 2025. You can see there we had a small nonrecurring item in there, which is an impairment provision on some fixed assets in our subsidiaries that we've been able to write back based on the better performance. And the other line that you can see that doesn't feature on other slides is the improvement in the associates line. So that also improved to contribute to our bottom line number of HKD 10.8 billion for the year. This chart is a map of the 2024 consolidated number at HKD 9.9 billion and how we get to the consolidated number for 2025. And of course, the big drivers you can see on here are the key things that affected our 2025 number. The story effectively of much higher capacity. So you'll see a bit more detail later, but around 26% increase in capacity, and that drove the big green bar there in terms of revenue, but also the larger red bar further to the right because, of course, we incurred greater costs in order to support this higher operations. But equally, the other big element in there is the yields going down. As we expected, we talked about this back in August. We expected yields to continue to normalize, and they did. That was an impact of about 10% over the course of the full year. Fuel, this is a bit of a hot topic at the moment. I'm sure you'll have questions for us on this later. But our fuel costs increased, of course, because we increased the capacity during the course of the year. But that was offset because actually, to some degree, because the fuel price last year for whole '25 was actually around 9% less than it was in 2024. So we got the benefit of a lower fuel price, but of course, higher fuel costs because we're operating greater capacity. But maybe at this point, you can see on the right-hand side, the chart where we set out our hedging. So I think you're all familiar with the fact that we hedge our fuel. And so you can see that for 2026, we've got about 30% of our fuel hedged at around or just under $70 a barrel. This is hedged on crude oil -- crude oil hedges rather than jet fuel. And maybe just to talk about jet fuel briefly because, of course, that is the large number or the elephant in the room perhaps. I think on average, since the conflict in the Middle East started, the jet fuel price has been around USD 167. Now if I look at that compared to the average jet fuel price for January and February, it's almost double. So you can see the step change that we've seen in jet fuel just over the last sort of 10 days. It's a dramatic increase. And so our hedging is on crude oil rather than jet fuel. And therefore, whilst we do have some protection from that hedging, obviously, it's not protecting against the jet fuel price in totality because that refiners difference or the cost of getting the fuel from crude to jet, the refinery is charging a huge amount, the crack spread, and that is significant at the moment. Our fuel hedging policy, though, does stay in place. We're continuing to be operate it the same way as we have done for the past number of years during 2025, and it remains in place today. I know that's another question you always ask me, so I'll answer it now. In terms of costs overall, this slide is setting out our cost per ATK, you can see including and excluding fuel, of course, our costs, the chart on the left, you can see them going up because we have increased our capacity. But the trend as a result of economies of scale is our cost per ATK coming down. So it was around 2.4% reduction if I exclude fuel between 2024 and 2025. So again, that we talked about that, I think, previously, that was as expected. Financing, of course, this is a key number for us, too. Chart on the left is telling you what the total cost of our financing was or a net number. And you can see that in 2025, that was a similar level to 2023. And the reason for that going down was a combination of 2 factors. Of course, we saw the interest rates start to go down in 2025. But also, we -- off the back of generating profits in '23, '24, we were able to pay off some of the debt that we had, and therefore, we're not borrowing at such high levels. And therefore, that brings our financing charges down, of course. Chart on the right shows you the split between our borrowings in terms of fixed versus floating. And you can see, I think I've talked about this before as well. We typically try to have around 50% in terms of fixed versus floating. We hover sort of around that number. You can see it was 48% versus 52% for 2025. And that strong profit position, you can see it drove into the cash flow numbers. So this slide is mapping our liquidity at the end of 2024, around HKD 19 billion and mapping it through to the HKD 25.4 billion that we had at the end of 2025. And the big green bar that you can see, of course, is the cash generation from our operations. We were able, therefore, to use it to invest. So some of the products that Ronald was talking about earlier, the aircraft, obviously, you have to pay some money upfront for some of those. We're starting to make investments, so around HKD 9 billion spend there. And we were also able to repay some of our financing as a result of the cash generation. Some funding, we refinanced. You can see new financing coming in, some we repaid, and we ended up with a balance of HKD 25.4 billion at the end of the year. Now you might say to me that's quite a big difference from the number at the start of the year, and that is shown on here, too. The reason for that, I'm sure you're all aware that we bought back the Qatar shareholding last month completed, and that cost us around HKD 7 billion. And so towards the end of last year, we were building up funds to be able to fund that buyback. So hence, the number at the end of 2025 was somewhat elevated as a result. At the end of February, of course, it came down because we paid for it. The other thing you can see on this chart is our gearing number, and that was down to 0.6 at the end of last year. So a healthy position. And the other thing this reflects too is the debt level. So you can see also, as I mentioned earlier, that has come down too. One of the elements of that, you may remember the end of 2024, we bought back a large portion, around 68% of the convertible bond. The remainder of that bond, around 2.1 billion was converted during the course of 2025. So it moved out of our debt balance and into our share capital and hence, brought the debt balance down too. Finally, on this section, I haven't talked about it yet, I should have done this at the start, the dividend. So the second interim dividend that we've announced today of HKD 0.64. So added to the HKD 0.20 we paid in October, made a total -- or makes a total HKD 0.84 dividend per share. You can see here, and as we mentioned the slide, although it's small writing, so you probably can't read it. But our policy is to pay approximately 50% of our profit after tax, adjusting for exceptional noncash items and of course, taking into account the environment at the time. But yes, we've announced today a second interim dividend of HKD 0.64 per share. And of course, that's a little bit higher because following the buyback, there's less shares in circulation. So the 50% number has a bit further to or more on a per share basis. So that's a very quick sort of wrap-up of the financial numbers. If I move perhaps more into the business elements, in terms of Cathay Pacific, this is our premium travel airline. This slide sets out the key statistics. So here, you can see the story that I mentioned earlier in terms of our revenue has gone up by almost 16%, but capacity went up by 26%. And so that's where you see the impact coming through on the yield going down by the 10% as those 2 parts of the equation intersect. So we continue to add more passenger flights and destinations as we grew that capacity. And the other thing that was slightly stronger in 2025 compared to 2024 was the load factors. And you can see those more clearly on this page. So they're in the middle chart. You can see that progressive increase over the last 4 halves of our load factors continuing up. So this chart is trying to show you by each half of 2024 and 2025, the numbers in terms of capacity, load factor and yield, as I say, load factor, you can see that upward trajectory; capacity, of course, you all know, we've been gradually increasing that over the past 2 years; and yield on the other side, again, we've talked about it a lot, the normalization of yield. The slightly interesting thing in 2025 was the second half yield managed to stay at a similar level to the first half. So you can see that sort of tailing off of the yield normalization. Moving on to Cathay Cargo, our second line of business. Again, the same slide as I've got for the premium travel. We've got the cargo revenue at a very similar level to the level it was in 2024. Their capacity went up too, not by as much as the passenger side of the business, but the reason for the capacity increase in cargo is the bellies of our passenger planes. There was not additional capacity on the freighters, but it was in the bellies of our passenger planes. They also saw some yield normalization, but not to such a strong or a large amount is on the passenger side of the business. And their load factors stayed very similar year-on-year. And then this, again, the same chart as we had for the travel business. You can see each half year numbers are somewhat different to the passenger part of the business. But -- so you can see that sort of steady load factor across the 2 years. Yield, first half, second half, we see that the second half was stronger. And the big difference in the capacity first half, second half for 2025 was in the first half of the year, we had some of our freighters for extended maintenance. So we didn't have quite as much capacity on the freighters themselves flying. But that was back available in the second half of 2025, and you can see that coming through there. I remember that we talked in August about what was the sort of peak going to be like for the cargo business because we often talk about the fact that the second half of the year for cargo, you have a sort of peak in Q4 as you get to Q4. And we wondered whether because of the sort of tariff situation and everybody was wondering is all the cargo being pulled forward in order because people were sort of stocking up, would there be a peak at the same level? I would say the cargo peak for Cathay Cargo was a strong peak in Q4 of last year. Then our lifestyle business, I won't touch on that. Ronald has elaborated earlier. Moving on to HK Express. So this is our fourth line of business. Now their capacity dramatically increased again last year, more than 30% during the course of the year. And you remember the prior year, it already increased by around 46%. So they've had a really strong capacity increase over the past couple of years. They launched more destinations. I think they're flying to around 37 by the end of last year and operating around 44 aircraft at the end of the year. In terms of the numbers, you'll have read in the announcement, I'm sure that they were loss-making in 2025. There you can see that capacity increase of nearly 32%, but the revenue only goes up by 7%, impacted by yield going down and load factor going down. And they were affected by a number of things, but the most significant, and again, we did talk about this in August was the changes in customer preference. So you remember, we talked quite a lot about Japan back in the summer with the earthquake rumor. And although that sounds a bit sort of unusual perhaps, but it had a big impact on the demand for our flights to Japan on HK Express in July and August, particularly. So that, of course, came through in our second half number. The other thing is they're increasing their capacity and they're adding new destinations. Some of these are destinations that we've not flown to before. There's not been an airline to fly between Hong Kong and that destination. So these new destinations take time to mature. So we are making a bit of an investment in raising awareness and creating new destinations, and that will take some time to mature. Then the industry-wide Pratt & Whitney issue continues on. I think we had about 5 aircraft on ground of HK Express during the course of last year, which is similar to the previous year as the Pratt & Whitney engines are not able to be repaired as yet. So that will continue on. But although these numbers perhaps look a bit negative, shall we say, I have to say the fundamentals of HK Express continue to improve. So things like their utilization of aircraft continue to go up. Their cost efficiencies are continuing to improve. Their on-time performance is strong. So from a sort of business from a group perspective, we are confident in their future trajectory, and we do see a path to profitability for them off the back of these strong fundamentals. In terms of sustainability, just to briefly finish off on this section, you know this is important to us. It's one of our key areas of focus in terms of sustainability leadership for the group as a whole. Our sustainability report will be published next month alongside our annual report. There's lots and lots of interesting information and facts for you in there to help you with your analysis. The 2 key areas for focus, as we've talked about before, our climate change and the circular economy. Climate change because, of course, this is financially material to us as a group, circular economy because this is very important to our customers. We have lots of initiatives underway in both these areas. If you've been on some of our flights, maybe you've heard our cabin crew asking to collect the plastic bottles back. So we've got lots of different things in order to remote development and improvements in both of these areas. But as I've said before, this is a challenge for the aviation sector, and it does need many stakeholders to get involved in order to work our way through this particular challenge. The last but not least, outlook. The first thing I was just going to briefly touch on, and this slide is more for your sort of later reference. You've probably read it in the press statements, et cetera, our share buyback from Qatar Airways that we completed late last month. As I said before, some of the information in these slides is for your easy reference. I don't talk to every single bullet point on them. But yes, this was a good outcome in terms of Qatar asking us if we're interested to buy their shares back and us deciding that this was a way to have an orderly exit for them as an organization. And of course, it has improved our earnings per share and the dividend per share as well. But that happened post year-end. In terms of our outlook for our passenger businesses. So we're confident in 2026, subject to Middle East geopolitical challenges at the moment, but we're expecting to grow our passenger capacity by around 10% for the year. So this, of course, is quite a bit less than the last couple of years. But we -- as Ronald already mentioned earlier, we're back to 100% capacity. So this is sort of moving us beyond that. We do see various challenges. Of course, the supply chain continues to be challenged, whether it's new aircraft deliveries, whether it's parts for maintenance. That still does have challenges, and we anticipate they will continue. We've got lots of processes and procedures in place to try and mitigate the impact, but it is something that should be flagged as a risk for us going forward. And of course, it goes without saying the current Middle East conflict is a part of sort of some huge level of uncertainty and volatility at the moment and how that plays out is really hard to assess at the moment. In terms of cargo, similar. The cargo flows, again, hard to predict or project. But as Ronald talked to earlier, our specializations give us some advantages in certain areas and our ability to be flexible with our network to move where the demand is coming from has enabled us to have a solid performance in cargo in 2025. And we also have the 6 freighter aircraft delivering in the future. Until then, their increase in capacity on the cargo side will come -- continue to come from the increased capacity on the passenger aircraft. So to wrap up before we -- I pass over to Andy to questions. We've had 3 solid -- or 3 consecutive solid years of financial performance, which on the back of that has enabled us to strengthen our balance sheet. We've been able to buy back shares. We've been able to reward our people. We've been able to commit to investing HKD 100 billion in aircraft, in product, et cetera, for our customers, for Hong Kong. We've been able to pay dividends as a result as well. So as we look forward into 2026, we're confident this year with a 10% capacity. I'm caveating that based on the current world situation. But generally, we're confident with our 10% capacity projection for the rest of the year. And of course, also, as Ronald said, 2026 is a very special year for us. It's our 80th anniversary, and we'll be holding all sorts of exciting events through the course of the year to mark the 8 decades that we've grown in Hong Kong and to celebrate our unique position as being deeply rooted in Hong Kong, proudly part of China and connecting us to the world. With that, I will hand on to Q&A.