By Lisa Barrington
DUBAI (Reuters) -Airline Cathay Pacific is looking to add more destinations on China's Belt and Road project, CEO Ronald Lam said on Sunday, after a new route to Riyadh starts up later this year.
Lam also said Hong Kong's flagship airline, which made heavy losses and layoffs during the pandemic, is on track to reach 100% of its pre-pandemic passenger flights by the first quarter of 2025, having reached 80% of capacity within the second quarter of this year.
Cathay had aimed to reach 100% capacity by the end of 2024, but in March moved the target back three months.
The airline reported its first annual profit in four years in March, however executives said they expect yields to normalise this year as the post-pandemic global imbalance between supply of flights and travel demand that drove up ticket prices and airline yields diminishes as airlines add capacity.
"Indeed we're seeing that this year ... the yield has been normalizing gradually coming down from last year. In particular, the supply and demand balancing is going quicker on the regional, the short haul routes," Lam told reporters during an airline conference in Dubai.
The carrier restored capacity more slowly after the pandemic than its closest rival, Singapore Airlines (OTC:SINGY), because it faced tighter quarantine rules for longer, and needed to hire more staff to bring back services.
Cathay this year said it intends to fly to more destinations on China's Belt and Road, Beijing's strategy to build an infrastructure network connecting China to the world.
In March it announced it would start flying to Riyadh as part of this push in the final quarter of this year, amid warming ties between Saudi Arabia and Beijing.
"We are looking at adding more," Lam said, adding that around a quarter of Cathay's current 80 routes are Belt and Road destinations.
Listed in Hong Kong, Cathay's largest shareholder at around 45% is UK-headquartered Swire Group. Its second-largest is Chinese state-owned Air China (OTC:AIRYY).
Several members of Hong Kong's legislature in March said they wanted Cathay to open new routes in line with China's Belt and Road policy, to hire more mainland Chinese staff and to practice what several legislature members called "social responsibility".
Lam told Reuters Cathay should serve Hong Kong and also China's development, alongside being a commercial airline.
"We believe there is a good balance to be struck between helping those agendas as well as ensuring our commercials are sound," Lam said.
"Riyadh is one good example whereby we can serve the bigger agenda, society, as well as making sure it is commercially sound for us," he said, referring to the new service between Hong Kong and the Saudi capital that is due to start in the fourth quarter. "We will continue to look for that sort of opportunity."
Lam said Cathay's plan to expand its workforce by around 20%, or 5,000 people, this year was also on track.