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<Research>UBS Expects CATHAY PAC AIR (00293.HK)'s Another Fuel Surcharge Hike to Only Partially Alleviate Cost Pressure
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CATHAY PAC AIR (00293.HK) will raise its fuel surcharge again starting 1 April, with an increase of approx. 34%, accumulating to a total increase of 174% compared to the levels before the Iran war at the end of February, UBS released a research report saying. The broker estimated that the total increase will result in an average ticket fare ticket price hike of about 11% compared to pre-conflict levels. Therefore, UBS kept rating at Buy, with a target price of $14.9. While adjusting fare ticket prices is a more effective lever to offset cost pressures, the broker projected that, all else being equal, a 1% increase in ticket prices can only offset the impact on earnings of a US$3.7 increase per barrel in fuel prices. Therefore, the current fuel surcharge mechanism can only partially alleviate cost pressures. AASTOCKS Financial News Website: www.aastocks.com |
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