Good afternoon. Welcome to the Cathay Pacific 2025 Interim Results Analyst Briefing. My name is Andy Wong, General Manager of Corporate Affairs for Cathay . Whether you're attending here in person or online, it is a pleasure to see you all here, and thank you for joining us. Introducing our speakers for today: Chief Customer and Commercial Officer, Ms. Lavinia Lau; Chief Financial Officer, Ms. Rebecca Sharpe. We'll begin the presentation by Lavinia and Rebecca, after which we'll open the floor to questions. In case you haven't scanned the QR code at the reception desk for an electronic copy of the presentation slide, a copy is available after the session for download. Without further ado, let me invite Lavinia to start the presentations. Thank you.
Okay, good afternoon, everyone. Hi, I'm Lavinia. I think I'll just spend a few minutes to share our group strategy before passing on to Rebecca to talk about the very important part, our first half performance. In terms of our group strategy, we, as a group, continue to grow both quantitatively and qualitatively. From a quantitative angle, I think June marks a very important milestone for us because that is when the group actually reached 100 destinations. Actually, by now, I think we are flying to 104 destinations already since we also just launched Brussels just on a Monday. Between the two groups, we have already launched or announced 19 new destinations for this year. If you look at the split, they are pretty widely spread throughout globally.
With Cathay Pacific going to longer destinations like Dallas and three new destinations in Europe, and for the HK Express side, continue to expand their footprint in the region. I think it's also important to note that apart from growing our breadth, we're also growing our depth in our network. I think this year we are adding a lot of new frequencies, particularly on the Cathay Pacific side. If you look at just this summer, on the long haul network, which everyone is very interested about, just on North America, we are increasing our number of flights by 50%, and in Europe, 30%, and Southwest Pacific, 25%. We are still a lot of people interested in new destinations, but I have to say that we are also adding a lot of frequencies on our existing trunk routes, which are very important in our network.
Of course, to fly to this increasing expanded network, we need to have more aircraft. I'm sure that you have already read the news of today. Apart from announcing our interim results, the very other, very exciting news that we have just announced is our new order of 777-9. We already have 20 aircraft, or such Boeing aircraft in our order, and now we are exercising our purchase right to add on another 14, making the fleet size a total of 35 for this particular fleet. The 777-9 will be our flagship fleet. The aircraft that will arrive starting from 2027, at least 2027/2028, the initial aircraft, they will be four-cabin aircraft equipped with our new flagship first class.
Eventually, this will be a mixed fleet, consisting of aircraft both with four cabins and three cabins, and this will be our new flagship fleet with a lot of new products, new cabin products to look forward to. Apart from this very exciting announcement, the other of our aircraft orders you will know about, altogether we will have over 100 aircraft coming to join our fleet in the coming years, ranging from narrowbody, regional widebody, long haul widebody, and freighters. Next year, actually these two years, our focus will be on taking delivery of our narrowbody aircraft, both for Cathay Pacific and HK Express. Starting from 2028, our regional widebody, the A330neos, will start to come in. Obviously, from 2027, also the 777-9, the four-cabin one, will start to come in as well. All these new aircraft will continue to help us expand our footprint globally.
Apart from growing quantitatively, we continue to ensure that we offer the best customer experience and provide value so that they can continue to get on our aircraft. I'm also very pleased to say that qualitatively, so far this year, we have already been winning quite a number of very significant industry awards. Cathay Pacific, if you know Skytrax, that's the main industry award. This year we have gone back into top three, and we also win the best economy class cabin and best in-flight entertainment. On the cargo side, we also win a very important award from ATW, Cargo Carrier of the Year. Even our little sibling, HK Express, has started to get recognition in some of the industry awards as well. I think this is all very good motivation for us to keep improving our service and enhancing the customer experience.
On the Cathay Pacific side, including the 777-9, our new order that we are making, we will be making well over HKD 100 million of an investment in Hong Kong, our International Aviation Hub. Apart from fleet, which makes up the bulk of that investment, we'll continue to also invest in new cabin products and new ground products. In the air, I think you might already be quite familiar with some of these. On the 777-300ER, we have been rolling out our award-winning ARIA suite. Currently, we already have seven of our aircraft equipped with this new product, and over the coming, well, 2024 months, we'll almost have one aircraft being rolled out with this particular product every month. This will continue to be deployed on our long haul routes.
Currently, we already have one daily flight each of London, Vancouver, Sydney, and Melbourne being operated with this new aircraft, and it will continue to be rolled out on more of our new long haul routes. Starting end of next year, on our current A330 regional aircraft, we'll also be doing some upgrading retrofittings throughout the entire aircraft. Particularly, we'll be equipping them with flatbed business class products. Even before that, on some of our other existing 330 and 777 regional aircraft, we're also giving them a refresh. If you have flown recently on them, you will see that they now come in new coverings, new colors, mimicking more of the other aircraft cabin products that we have. That is a refresh before we actually go into the retrofit for the rest of the 330 with the new cabin products I described.
Of course, last but not least, we have always talked about flagship fleet, 777-9. According to the latest delivery schedule, they will start coming into our fleet in the early part of 2027. In terms of ground products, lounges are very important for our members, for our premium customers. We'll continue to invest in these very important signature flagship lounges of ours. Starting earlier this year, we have already embarked on a program to actually upgrade all our existing lounges in the Hong Kong International Airport. We have closed The Wing first already. In place, we have reopened The Bridge, which is our new proposition. It's really a new redesigned Bridge, so to speak. This will be the first part of our HKIA lounge renovation programs. Also in the outports, we continue to have our own flagship lounges in strategic ports, which are of high value to our customers.
Actually next week in Beijing, we'll be reopening our flagship lounge in here. As you know, Beijing is a very strategic route with a lot of VIPs and premium customers traveling. I think this lounge will be very welcomed by them. Next year, early next year, we'll be also opening for the first time our own flagship lounge in New York as well. New York is a very business-happy route, so I'm sure that this will also be very welcomed by our corporate travelers. Apart from the travel side, of course, our different lines of business will continue to receive our investment focus as well. On the cargo side, I'm sure that during the Q&A, there will be a lot of questions and discussion on the outlook.
Apart from handling or tackling the short-term challenges, given the tariff situation and all the geopolitical issues, I think we are not forgetting that our commitment to invest long-term on the cargo business will continue. Particularly, we have been over the past few years trying to really differentiate ourselves from other cargo operators by, apart from carrying general cargo, moving into more specialized cargo solutions, which will give us a higher premium and, again, more value for our customers. Some examples here, last year we carried Pandas, so our whole life animal solution. Recently we have been carrying, actually, terracotta warriors from Chinese mainland down to Australia. All these valuable goods need special expertise.
Apart from cargo solutions, we'll also continue to invest in our whole customer experience, particularly the digitalization process, so as to allow our customers to be able to deal with us or have business with us in a more convenient manner. I think by continuing to invest in these, it will help us to, over the long term, again, build up our position to really be a premium cargo carrier and differentiate us from others. Last but not least, we do have a non-air line of business within our group portfolio, so our lifestyle business, although it's relatively small compared to the other streams, will continue to be a good complement and supplement to our other three lines of business. Within our lifestyle business, more familiar to every one of you will be our Asian Miles business.
In that side of the mileage business, we continue to have a lot of partnerships, particularly on the payment side, our own co-brand cards, and all our partnerships with other conversion cards have been performing very well so far. In the product side, the non-mileage side, we'll continue also to invest in our other business, for example, our cafe shop. Before you come in, you should have seen some of our products that we are promoting in there, and also cafe holidays. I think these are really businesses which can allow us to tap into our very good membership base and allow us to really tap into more of the world share as well. All in all, I think we have a very robust business or robust strategy for our different lines of business, which will help propel us forward.
I'll pass it on to Rebecca, who will then talk you through some of the really highlights of our first half performance.
Thank you, Lavinia.
Thank you, Lavinia. Good afternoon, everybody. Oh, I've forgotten my clicker. That would help me. That's not a good start, is it? Oh, I can use this one. Thank you. Moving to, or changing tack rather, Lavinia's talked to us and given you a bit of insight and flavor in our strategy. I'm going to take us back to the numbers. As I talk about this, probably if I was to capture it in one short sentence or three elements, our first half result is solid, and it has been driven by three key elements: passenger volumes increasing, a solid performance from our, or consistent performance from our cargo business, and a lower fuel price. That's what's helped us deliver a third consecutive profitable first half. It's great to be standing here talking about that today. This slide captures six of our key financial metrics.
I won't talk through all of them, and I do intend to try and go relatively quickly through the slides in general to give you time for questions. Maybe just to touch on a couple of these at the moment. Revenue starting there. Our revenue in the first half of this year compared to the first half of last year has gone up by 9.5%. As I say, this is primarily driven by the increasing passenger volumes, increasing capacity in our Cathay Pacific business. That has contributed to the group attributable profit of HKD 3.7 billion for the first half, very similar to the first half of 2024, which was HKD 3.6 billion. Off the back of this, we've been able to announce today a HKD 0.20 dividend as our first interim dividend for the 2025 full year.
Again, that is the same as the first interim dividend we announced this time last year. Our earnings per ordinary share have increased by just over 8% in the first half this year. You may remember, although I think I have forgotten to some degree, but last year at this time, we had preferred shareholders. We still had HKD 9.5 billion of preference shares. That distorted the earnings per share number, which is driving some of the difference. If I move on to focusing on the profit, this slide just sets out the different profit numbers and shows you any one-off non-recurring items and also the impact of our losses from associates. The thing I was just going to point out on this is the losses we take into our books in the first half of this year from our associates have gone down in the first half.
That's moving in the right direction. Overall, though, the bottom line is HKD 3.7 billion. This chart is trying to show you the key drivers. We're mapping here the first half of 2024 through to the first half of 2025. It's quite stark there. You can see what I was referring to earlier. The green bar, which is a positive bar, of course, is the revenue increase driven by the volume, the increased capacity. Of course, with that increased volume and capacity come increased costs. The red bar further across on the slide, I'll come back to the other big red bar. The one halfway across is the costs of operating that greater capacity. Interestingly, the little red bar you can see there next to the large one for the operating cost is fuel.
Of course, with the increase in capacity we're operating, fuel has gone up as well in terms of how much we've consumed. Because of the lower fuel price in the first half, that has been very beneficial to our numbers in terms of the cost of operating that extra capacity. This is in line with what we said when I stood here back in March, the yields are continuing to normalize. The red bar you see there, again, reasonably significant, is the impacts of the yields of our business coming down as expected. Suffice to say, although the bottom line number is very similar to the number we presented last year, the components within it are somewhat different. Fuel, I touched on that already. This chart, the table at the top, tells you the total spend on fuel if you look at that bold line in the center.
You can see there in terms of total fuel spend has gone up by 3%. Given the 26% capacity increase we've seen, that's quite a small percentage for that number to increase by. The line below on that table shows why. In terms of our inter-fuel cost, that has come down by 13%. The line below that reflects our consumption per 80k in terms of fuel. I know I had a question about that this time back in March when I stood here before, and that has gone up again a little bit as it did last time when we were talking. The reason for that is as we utilize our older aircraft more, they are not quite so fuel efficient as our newer aircraft, and therefore our consumption is increasing in terms of fuel.
The chart on the bottom left, of course, reflects the jet fuel price over the last 18 months. I think what I quite like about this chart is the six months from January 2025 shows the pure roller coaster that we've been on with the fuel price. That is why we would be continuing to hedge fuel. Again, another question that I always get is, are you continuing with your fuel hedging policy? The answer is yes. Our fuel hedging policy remains unchanged, and we continue to hedge a portion of our fuel to help us mitigate that volatility that we see in the jet fuel price. The chart on the right sets out the fuel hedging that we had in place as at 30th of June. You can see if I look 12 months forward, we've got just under 30% of our fuel hedged.
The red line on that chart is the strike price, the price it's been hedged at. You can see it is progressively coming down because we typically will hedge for up to two years, but at differing percentages based on our forecast consumption and based on the fuel price at the time. Moving on from fuel, of course, that's a big cost component. If I look at the trend in our overall unit costs, as we're continuing to grow our capacity, our unit costs continue to come down. This chart is showing 2023 full year, 2024 full year, and the first six months of this year. I should draw your attention to the darker green bars on this chart because they exclude fuel. Fuel is always going to distort our unit costs.
You can see that on that chart, excluding the fuel costs, the unit cost is continuing to come down as we increase our capacity. Financing charges are very similar this first half compared to last first half. In terms of our interest rate profile, at the end of June we had 60% of our financing on floating rates and the balance of 40% on fixed rates. If I move on to talking about cash, we have strong operating cash performance again in the first half of this year. This chart is mapping the balance we had in liquidity at the start of the year to what we had at the end of June. Just a reminder, liquidity is our cash that we have on hand and also the committed funds we have access to. You can see the different elements.
We split it into the operating activities and the financing activities. That green bar of cash generation, the HKD 11.9 billion, actually is very, very similar to the first half of last year. I think the same green bar was HKD 12.1 billion. Very similar. Now that strong cash generation has enabled us to do a number of things. Obviously, the smaller red bar in the center is what we've invested in. You heard Lavinia earlier talking about the ARIA suite. There's some spend in that HKD 3.8 million that is going on the ARIA suite that I hope a number of you have had the opportunity to fly and you'll then be able to tell me that was a great investment. It's not just that. It's also a number of other things, but just as an example, I quote that.
In terms of the financing activities, one of the other things that the strong cash performance has enabled us to do is to repay some financing early. There's a small amount of financing that we have repaid ahead of time in order to save some interest costs. The other elements of financing are generally relatively routine in terms of loans expiring and leases expiring and being renewed. Last but definitely not least, the dividend we announced, the second interim dividend for 2024, we paid that in May. That appears in our cash flow statement for the first half. We did take on a bit more committed facilities, the green bar at the end, in order to have a little bit more liquidity around us, given the uncertain economic environment that we find ourselves in at the moment.
Turning to liquidity specifically, the chart on the left shows that liquidity balance for a year ago, for December and now. You may be wondering why we had HKD 25.4 billion in liquidity at the end of June this time last year. If you remember, we were building up cash in order to pay back the balance of the preference shares. In July of 2024, we repaid the remaining HKD 9.5 billion in preference shares. In June, we did have a higher level of liquidity in place in order to be able to do that. Of course, we bought back preference shares and replaced some of that with debt. That's why you see the big step change in gearing on the chart on the right, which has in this first half of the year come down a little bit as we've generated greater levels of cash.
If I transition from more financial figures to some of the slightly more operational figures for each of the lines of business that Lavinia was talking about earlier, starting with Cathay Pacific, which of course is our premium airline. Here we set out five of the key metrics for that business, all of them sort of looking positive. That is partly reflecting what Lavinia was talking about in terms of the addition of destinations and frequencies. We can see that coming through in higher revenue numbers, in higher available seat kilometers, more passengers carried, and also in load factor. Equally, we can see the passenger yield number coming down as we expected. As you have got more supply coming in, we have always talked about sort of yield in terms of supply and demand.
As we have got more supply coming into play, the demand is closer to supply and therefore yields start to come down. If I dive a little bit more into capacity and load factor and yield, here we are trying to show you the comparison of the last 18 months. You can see that capacity climbing across that 18-month period. The load factor is also climbing, staying reasonably robust during that period, and the yield progressively reducing over that same period, as I say, as the supply and demand become closer to each other. I then turn to Cathay Cargo. Cathay Cargo has had a solid performance in this first half despite the challenges that have been thrown at us in the global economy. We can see that coming through in their numbers.
Their revenue did not change that much, a little bit higher than it was this time last year. Just for your reference, the cargo revenue is approximately 20% in the first half of our total revenue as an organization. I think it is 20.5%. We have had more capacity also in cargo, and that is driven not by additional freighters, but the additional passenger planes that we operate. The passenger bellies of our passenger planes are what is adding capacity for the cargo business. That has helped, of course, us carry more cargo in the first half. Again, yield under pressure given the tariff situation and the sort of changing demand for cargo flows.
The beauty of our network, our freighter network, is that we can adjust the routes where we fly to match more effectively with the demand, and that enables us to maintain the levels and the numbers that we see here. Again, digging into, similar to the Cathay Pacific business, digging into capacity, load factor, and yield. The capacity chart on the left, you can see in the 2025 first half number how significantly higher than 2024 first half that capacity is. I think it is about an 8% increase. You might be wondering, why is it less than the second half of 2024? Typically, of course, the second half of any year is stronger than the first in cargo, typically.
The main reason for that variance is because our freighters that have had base maintenance in the first half of this year, unfortunately, a number of them have been a bit delayed. We have ended up with aircraft on ground longer than anticipated and therefore a bit less capacity available to us. Load factors have stayed reasonably robust given the economic environment. You remember that typically you've got much more demand on the flights going west than you have coming east, and that drives the load factor in cargo. Yield is remaining reasonably solid despite the environment that we're operating in at the moment. Lifestyle, I won't mention. Lavinia gave you a bit of flavor of the things we're doing there. If I then move on to our fourth line of business, HK Express.
You remember this is a part of our dual-brand strategy where we have Cathay Pacific as the premium airline and HK Express as the low-cost carrier, looking to tackle two very different customer segments in support of that. Just for your interest in terms of the capacity that we operate, if I look at ASKs as a measure, HK Express equates to about 11.5% of those ASKs in the first half of the year. Now we've got the same or very similar metrics for HK Express as I showed you for Cathay Cargo and Cathay Pacific. Unfortunately, more of these are in a red color than the other lines of business. They have been facing some headwinds this first half, and those have resulted in revenue being pretty much the same as it was a year ago.
They have generated a loss of HKD 500 million approximately, but they continue to increase their capacity as we grow that part of the business. Equally, they've also had impact on load factor and passenger yield. I suppose the thing I would say about HK Express's first half is that they have seen quite differing demand in their traditional route. Japan for HK Express has been a very strong market for them. Unfortunately, given earthquake rumors, etc., the demand for flying to Japan has been significantly impacted by that in the first half. Therefore, that's had a knock-on effect to this business. The other element is as we grow the business and add new destinations, they take time to mature. A number of them are sort of brand new destinations for people to fly to from Hong Kong.
It takes a while to mature, and they then put a bit of pressure on our cost base. The other element of this in terms of sort of looking a bit further ahead, you might say to me, what's going to happen with this business? I think what we're seeing is the Japan market is starting to pick back up again. It's not at the normal levels that we saw pre-earthquake rumors, but it is starting to pick back up. I think the other thing is we see this as a long-term business for us. It's part of our dual-brand strategy. If I look at the fundamentals of the business in terms of things like aircraft utilization, cost per ASK, those are trending in the right direction.
We can see through looking ahead a path to profitability for this business, albeit in the beginning with investing in new destinations with challenges from certain external factors, we can see that short term it does have its challenges. Last but definitely not least in this section, before I move on to outlook, is a little bit about sustainability. I think you're all familiar with our ambitions in sustainability leadership. You may remember if you joined this presentation in March that I talked about the five levers for airlines to get to net zero. Don't worry, I'm not going to talk about all five levers again this morning, or this afternoon rather, but you may remember that they included things like new technology, so sort of hydrogen planes in the future. We talked about new aircraft deliveries.
Of course, we've got a number of those that will drive efficiency in this space. Fuel operating efficiencies will also drive improvements here. Of course, you've got carbon offsets. The biggest one for us and for all airlines to focus on is sustainable aviation fuel. We continue to work on that as one of our key pillars in this space. In the first half of this year, we've progressed a couple of things here. We signed an off-take agreement with SK Energy to upload some SAF in Incheon in Korea, and also work with Sinopec to bring some SAF to Hong Kong International Airport. We continue to make small steps of progress in this space. Our second pillar in the Cathay Group is around the circular economy.
We know that the sort of cabin waste, the single-use plastics, in terms of our carbon footprint doesn't have a major impact, but to our customers, it does. It's very much what our customers see. When we get customer feedback, this is a space that they want us to continue to improve. We continue to work on reducing our single-use plastics. For those of you who've flown with us and seen the newer amenity kit, you'll have noticed, I'm sure, there is far less single-use plastic in those kits. You might have been on some of our flights when we're looking to collect the water bottles so that we can recycle them. We're trying to make small steps in this direction as well. This is a hugely challenging area. Airlines can't do it alone. It's going to take quite a long time.
It needs all stakeholders to come together to support us collectively moving towards net zero. Just a flavor for you of where we're at with that. Finally, if I just talk a bit about outlook, which I'm sure all your questions will be about in a few minutes. Trying to start this off here, in terms of our passenger businesses, we see that demand will be robust, but there may be challenges on different routes subject to external factors. I already mentioned Japan, and that I'm sure will take time to recover based on what we've seen in this month so far. Overall, we think demand for travel is robust. We will continue to add, Lavinia mentioned it earlier, more destinations. We'll continue to add frequencies to different destinations, sort of deepening our numbers of flights to different places, but also adding different places.
We'll continue to be adding capacity into the network, and consequently, that will have impacts on yields and traffic mix. We're expecting some changes there. Of course, I couldn't get through a presentation since COVID, I don't think, without talking about supply chain. The supply chain in our sector continues to be challenged. Parts supply, maintenance, etc. There are still challenges. The production line for new aircraft, these are still challenged as the industry still continues to recover from COVID. In terms of cargo, the word I would just say, cargo is uncertainty. Although uncertainty can be a bit of a scary thing, the thing I would say about our business is we have worked really hard to put in place the ability to navigate through this, to be flexible. When we see demand on certain routes changing, we can flex where our network goes.
We'll continue to work hard to adjust to the demand that we see out there in the market. In terms of the capacity itself in this space, with the increasing capacity on our passenger fleet, the passenger bellies provide more capacity for cargo. There will continue to be an increase in capacity in cargo coming through our passenger fleet. In summary, I would say we've had a solid first half of 2025 driven by passenger volumes, solid cargo, consistent cargo performance, and a benefit from fuel prices. That's enabled us to pay, or to announce rather, a first interim dividend for 2025 of HKD 0.20 per share. As Lavinia Lau mentioned earlier, we got to 100 destinations in June, a very exciting milestone for us.
We're above that now, and we'll continue to grow the number of destinations, not just destinations, also the number of frequencies, relatively significantly to North America, Europe, etc. In terms of our fleet, we've got four narrowbody aircraft delivering in the second half of this year. They will be going to HK Express. With today's announcement of the exercise of 14 purchase rights, we will be taking delivery of more than 100 aircraft over the next few years. That is a big part of our more than HKD 100 billion investment that we have committed to. This demonstrates our confidence and our commitment to the Hong Kong International Aviation Hub and its success. Aside from that and our commitment to the future, we believe that I'd be sort of naive to stand here and say the business environment is fine. There is lots of uncertainty in the environment.
There's been uncertainty in the first half. I think that will be ongoing. I can say that with the strong foundations we've put in place over the last few years, navigating these more challenging times when they arrive for all of our lines of business is not easy, but it's doable because of those strong foundations. I believe that based on what we see around us and what foundations we've put in place, we can see a path to continuing to grow a successful business into the future. Thank you.