Asia Pacific Airlines: Adding Long Haul Premium Beta – Upgrade Cathay to Buy as APAC Airlines Top Pick

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Asia Pacific Airlines: Adding Long Haul Premium Beta – Upgrade Cathay to Buy as APAC Airlines Top Pick

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20 Jul 2026 06:47:21 ET │ 40 pages

Asia Pacific Airlines

Adding Long Haul Premium Beta – Upgrade Cathay to Buy as APAC

Airlines Top Pick

Kaseedit Choonnawat AC

CITI'S TAKE +66-2-079-3606

We see an enhanced investment thesis relative to our Jan26's constructive kaseedit.choonnawat@citi.com

view on APAC airlines. In short, (i) passengers’ ability to absorb higher ticket AC Jate Jaturanpinyo

prices following the ongoing conflict in the Middle East has been broadly

resilient and appears increasingly durable, (ii) jet fuel prices are likely to +66-0279-3148

sequentially soften into 2027E faster than the normalization of unit revenue jate.jaturanpinyo@citi.com

per our estimates, (iii) leading to 2027E earnings being broadly on par with Eric Lau

2025 for the five APAC FSA airlines under our coverage; (iv) we see the most +852-2501-2726

attractive risk/reward at Cathay Pacific and upgrade our rating to Buy with

HK$16.2 TP revised up from HK$11.2. We switch to Cathay as our Top Pick eric.h.lau@citi.com

in the APAC airlines sector, replacing China Airlines. Samuel Seow, CFA

+61-02-8225-4321

Upgrade Cathay to Buy from Sell — Strong corporate & premium leisure demand in samuel.seow@citi.com

HK’s home market supported further by long-haul connecting traffic spillover from

Middle East (Cathay Jun 23rd) pushed Apr-May’s passenger load factors close to Arvind Sharma

90%, outweighing our concerns over weak Chinese outbound demand which had +91-22-6175-9852

driven our prior rating downgrade to Sell from Buy in Jan’26; while these concerns arvind1.sharma@citi.com

over Chinese outbound weakness remain, they are now less relevant. Together with