The Japan Times - 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 announced at a news conference.

Energy concerns arising from the war have driven up oil prices, with some Asian airlines hiking ticket fares in response.

"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."

The announcement came after Cathay 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 Cathay 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".

The firm 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's overall costs increased owing to capacity growth, with net fuel costs rising by 11.2 percent.

It said it plans to reduce exposure to fuel price risk by hedging its expected consumption.

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

The carrier suspended all March flights to Dubai and Riyadh this week because of the war in the Middle East, extending earlier suspensions.

"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," Lorraine Tan, Morningstar's equity research director, said in a March 3 note about Asian airlines.

Carriers all hedge a portion of their fuel costs but margins could still be affected, Tan said.

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

K.Hashimoto--JT