Hong Kong’s flagship carrier, Cathay Pacific Group, posted its strongest first-half profit since 2010, remaining resilient amid Middle East geopolitical tensions.

According to its interim results for 2026 released on Wednesday, the Group posted a 71 percent year-on-year surge in attributable profit to HK$6.243 billion ($796 million), boosted by robust passenger and cargo demand, improved performance from low-cost carrier HK Express, and stronger contributions from associates.

It also registered a 27.2 percent rise in passenger revenue to HK$47.34 billion and a 23 percent increase in cargo revenue to HK$15.7 billion.

As the broader aviation sector bore the brunt of a jet fuel price shock, the Group’s total fuel expenses hit HK$23.2 billion in the first half, marking a 58.5 percent year-on-year jump. To mitigate increased fuel costs, HK Express consolidated flights, delivering a 7.4 percent year-on-year capacity cut in June.

The International Air Transport Association’s latest financial outlook warned global airline profitability would halve, weighed down by Middle East conflict disruptions and higher fuel prices.

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“Jet fuel costs rose sharply, nearly doubling compared to the first quarter and posing business challenges. Fuel prices have recently rebounded on renewed Middle East tensions. We expect fuel prices will stay elevated through the remainder of this year,” said Group CEO Ronald Lam. The group added that its primary measures to offset elevated jet fuel costs are fuel surcharges and fuel hedging.

Even with persistent cost headwinds, Cathay Pacific’s passenger business saw remarkable growth, supported by robust travel demand coupled with higher Hong Kong transit volumes as passengers opted for alternative routings amid regional tensions. It carried 16 million passengers in the first half, up 17.5 percent year-on-year.

Europe stood out among Cathay Pacific’s regional markets, recording the steepest year-on-year gains. The carrier added extra European flights and seat capacity in March and April to meet the surging transit demand between Europe and Oceania via Hong Kong.

“The passenger recovery of Cathay Pacific is backed by Hong Kong’s broader aviation progress, including the steady launch of new international air routes and the commissioning of the third runway, which expanded the airport’s passenger handling capacity. The airline’s upward passenger momentum in H1 2026 also stems from a low 2025 comparison base, a year dampened by market jitters over economic spillovers from Japan’s earthquake,” said Kenny Ng, a strategist at Everbright Securities International.

Figures released by Hong Kong International Airport indicate passenger traffic grew 11.7 percent year-on-year to 32.8 million in the first half, alongside a 4.1 percent rise in cargo throughput to 2.5 million metric tons.

On the cargo side, Cathay Cargo carried 8.5 percent more cargo in the first half compared with a year earlier, with revenue increasing 23.9 percent to HK$13.8 billion, boosted by the carriage of high-value technology products.

Lavinia Lau, chief customer and commercial officer of the group, said that regional semiconductor shipments are substantial across the Chinese mainland, Southeast Asia and Northeast Asia, with most shipments bound for the US. “The AI boom has driven both cargo flows from Asia to America and within the region, bringing ample opportunities,” she added.

Contact the writer at charlottezhou@chinadailyhk.com