Cathay Pacific buys 14 planes in $8 billion deal with Boeing, first in a decade

Cathay Pacific Airways Ltd. is doubling down on its long-haul expansion with the first purchase of Boeing Co. widebody aircraft in a dozen years, while it struggles closer to home with its HK Express unit suffering from a sharp drop in regional demand.

The airline said it will buy 14 additional Boeing 777-9 jets, with an option to buy seven more of the U.S. company’s largest airliner, confirming an earlier report by Bloomberg News.

Cathay announced the order as it reported first-half results that disappointed investors, prompting the shares to tumble the most in almost 17 years in intraday trading. While Hong Kong’s flagship carrier reported a small increase in net income, that gain was overshadowed by disappointing passenger yields – a barometer of how much the airline earns per kilometer per passenger.

The Boeing purchase expands Cathay’s fleet of long-distance jets that also includes the Airbus SE A350 models. The carrier said travel demand for its namesake unit remains robust and the airline will continue to add more flights and destinations.

By contrast, the airline warned that its HK Express unit faces short-term challenges, in part because of weakness in the Japanese tourism market. The budget carrier has tried to offset weakness in Japan by expanding in Southeast Asia, South Korea and China.

In the first half, net income rose 1.1% to about $471 million, while revenue rose 9.5% to HK$54.3 billion. Expenses rose about 10%. Yields, a proxy for airfares and the competitive pressure that Cathay faces, fell more than 12% to HK$60.4 cents.

The stock closed down 10%, the worst performance in 41/2 years. So far this year, the shares have gained about 14% this year

The airline group carried 17.4 million passengers, 29% more than the same time last year. At the same time, costs continued to weigh on the airline’s results. While lower jet fuel prices offered some relief, Cathay said its fuel bill rose due to the increase in the number of flights it operated.

The order for additional Boeing jets is a major boost for the 777X program, which is yet to be certified and is years late coming into service. Cathay’s last Boeing order was in 2013. Since then, the U.S. planemaker has lost to rival Airbus SE on commitments amounting to about 150 jets.

Cathay’s latest order makes it the largest buyer of the aircraft in Asia, though still far behind Gulf carriers Emirates Airline and Qatar Airways, which have purchased the model in triple-digit numbers.

The carrier was one of the first to commit to the 777X program when it placed an order in December 2013, for 21 777-9s. Cathay Pacific said it will progressively replace a portion of its existing fleet of long-haul widebody aircraft.

Cathay Pacific, whose major shareholders include Swire Pacific and Air China Ltd., operates a fleet of 234 aircraft: 72 Boeing planes and 162 Airbus jets. It has agreements to buy more than 100 new aircraft, according to its 2025 interim report. The airline has pledged more than HK$100 billion worth of investments, largely in new aircraft.

Airbus has previously scooped up consecutive orders with Cathay for passenger widebody, single-aisle and freighter jets.