Cathay Jet Fuel Costs Double, Forcing Surcharge Review
Cathay Pacific (00293.HK) confirmed its jet fuel prices for March doubled compared to the average levels in January and February, a direct consequence of rising Middle East tensions. During the airline's 2025 results announcement, CEO Ronald Lam identified the sharp cost increase as the primary operational impact of the conflict and stated the carrier will announce details of a fuel surcharge adjustment as soon as possible. The airline's financial exposure is amplified by its hedging strategy. CFO Rebecca Sharpe noted that last year's hedging ratio was approximately 30%, a level that offers only partial protection against the extreme volatility that has seen jet fuel prices climb from around $90 to as high as $200 per barrel.
Regional Carriers Follow With Hikes Up to 35%
The cost pressure is not unique to Cathay, forcing a wave of fare increases across the Asia-Pacific region. Hong Kong Airlines announced it would raise its own fuel surcharges by up to 35.2% beginning March 12. Similarly, Australia's Qantas Airways and Air New Zealand are raising fares to cope with soaring fuel expenses, which typically account for 20-25% of an airline's total operating costs. Despite the significant margin pressure, airline shares have stabilized after an initial selloff. Cathay Pacific's stock gained over 4% in recent trading as global oil prices retreated from a peak of $119 per barrel, providing investors a degree of relief, though the underlying cost challenges for the industry remain acute.