DBS: Cargo To Be Key Rev. Driver For Cathay

The video discusses Cathy's performance in 2021, highlighting its better-than-expected results driven by cost-cutting and strong cargo yields. The investment recommendation is upgraded to hold, using a price to book valuation due to cyclical earnings. Market speculation about a takeover is addressed, with management assuring no change in shareholding. Concerns include rising fuel prices and cash burn, but Cathy is well-hedged and has sufficient liquidity. The impact of oil prices on airlines is significant, with Chinese airlines most affected. Singapore Airlines' recovery prospects are optimistic, pending travel restrictions.

What were the two main factors that drove Cathay Pacific's performance in the second half of 2021?

• Expansion into new markets and partnerships

• Higher ticket prices and government subsidies

• Cost-cutting measures and strong cargo demand

• Increased passenger traffic and new routes

Why is the price-to-book valuation method used for Cathay Pacific?

• Due to the cyclical nature of the airline industry

• Because the airline is highly profitable

• To account for rapid expansion plans

• Because it is the only available method

What is the current speculation in the market regarding Cathay Pacific?

• A potential takeover

• A merger with Singapore Airlines

• A significant drop in stock prices

• A new CEO appointment

What are the main concerns for Cathay Pacific besides a potential takeover?

• Increased competition from low-cost carriers

• Decreasing market share in Europe

• Lack of new aircraft

• Rising jet fuel prices and wage inflation

How much liquidity does Cathay Pacific have to manage its cash burn rate?

• 10 billion Hong Kong dollars

• 20 billion Hong Kong dollars

• 30.3 billion Hong Kong dollars

• 40 billion Hong Kong dollars

What percentage of its jet fuel consumption is Cathay Pacific hedged for in the first quarter of 2022?

• 25%

• 50%

• 75%

• 100%

What is a key question for the Singaporean Transport Minister regarding travel restrictions?

• When will new aircraft be purchased?

• When will vaccinated travel lanes be removed?

• When will Singapore Airlines merge with Cathay Pacific?

• When will ticket prices be reduced?