Cathay says surcharge to rise as fuel prices jump during Mideast war

The price of fuel so far this month is double the average of the previous two months, CEO Ronald Lam said at a news conference.

Some Asian airlines have begun hiking ticket fares in response to energy concerns arising from the war that have driven up oil prices.

"In March, like ever since the Middle East episode began, the costs of our fuel already doubled," Lam said.

"So we are going to announce (a surcharge rise) very soon... in order to ensure the smooth operation of our flights."

Cathay's announcement came after it predicted in a filing earlier on Wednesday that it would boost passenger capacity by around 10 percent this year despite the "volatile" geopolitical environment.

The group reported an attributable profit of HK$10.8 billion (US$1.39 billion) in 2025, an increase of 9.5 percent on the previous year, which it said was driven by "increased capacity, solid passenger load factors and resilient cargo demand".

It said this represented a third consecutive year of solid financial performance during "a period of rapid rebuilding".

"The prevailing global geopolitical environment is volatile, causing unexpected shifts in passenger and cargo traffic flows as well as jet fuel prices," chairman Patrick Healy said in a statement.

"We expect to grow passenger capacity by around 10 percent in 2026 as we add frequencies and destinations to our network, which will also contribute to increased cargo capacity," he said.

Total revenue rose 11.9 percent from the previous year.

The group also announced a second interim dividend payment of HK$0.64 per share, bringing total dividends for the year to HK$0.84 per share, or HK$5.2 billion.

Cathay said extra flights to Europe would be operated in March to cater for an upsurge in demand.

It said it also observed a "general increase" in demand from other regions, particularly for long-haul flights, with travellers looking for alternatives to routes that rely heavily on Middle Eastern hubs.

The carrier suspended all March flights to Dubai and Riyadh this week because of the war in the Middle East, extending earlier suspensions.
Control costs
Cathay's overall costs increased owing to capacity growth, with net fuel costs rising by 11.2 percent.

The carrier hedged about 30 percent of fuel consumption in 2025 to lower costs.

The group's managers said they would follow the established mechanism of reducing exposure to fuel price risk through hedging, as it has done in recent years.

"We do it with the objective of minimising volatility in the short term, and we don't have any plans to change from what we're doing at the moment," chief financial officer Rebecca Sharpe said.

Chief operations officer Alex McGowan said Cathay has no "undue concern" over the supply of aviation fuel, but will keep a "very close watch".

Carriers all hedge a portion of their fuel costs but margins could still be affected, Lorraine Tan, Morningstar's equity research director, said in a March 3 note about Asian airlines.

"With fuel cost being a significant operating expense, the jump in jet fuel prices is expected to hurt profit for the June quarter at the least," Tan added.

Cathay Pacific's share price rose more than 4.3 percent on Wednesday, outperforming the Hang Seng Index, which was down 0.24 percent.

Hong Kong Airlines said on Tuesday it will raise the fuel surcharge on most of its flights from Thursday.