Thank you very much. This is Perry from UBS, and congratulations for the strong result for three years in a row.

I got two questions: first related to your passenger capacity, you've been saying we are going to grow 10% this year. In terms of the fleet, we are probably growing at 4% in terms of your passenger aircraft.

I'm curious in terms of the growth, where would drive that 10% capacity growth? That's my first question.

The second question is related to the situation in Middle East. Obviously it drive up the fuel price significantly, and crack spread has widened very significantly too.

What sort of approach Cathay would take in this situation where crack spread has widened to an extent that we didn't really see over the last one to two decades? Would ticket price adjustment be something on the tables to address the higher fuel cost?

That's all for now. Thanks.

Thank you, Perry. Do...

I'm happy to take... You can.

The first question regarding our passenger capacity, 10% year-on-year projected for 2026. First, we are still taking delivery of eight narrowbody aircraft this year, so that would give us more capacity.

Second is that throughout 2025, month-on-month actually we've been growing until we hit the peak in December. When we keep 2026 even flat, I think there's still year-on-year growth, particularly on the earlier months of the year.

I think that will generate the 10%. The second question regarding the spike in fuel price, yes, as Rebecca mentioned, comparing the March jet fuel price to the last two months, it has almost doubled.

I think it's a sharp surge, and we hope that there's a peaceful resolution of the current conflict, that things will be more back to normal sooner rather than later. In the meantime, I think we would rely on our mitigation measures.

As Rebecca mentioned, I think 30% of our fuel is hedged for 2026, although we're only hedging the crude oil part, not the crack part. Secondly, we have a fuel surcharge mechanism, both on the travel side as well as on the cargo side.

The fuel surcharge takes into account jet fuel price, and since jet fuel has almost doubled, I think we'll be making announcement about increasing fuel surcharges for both travel and cargo in due course. That's another mitigation.

In terms of our freightage and fares, we will have to look at the supply and demand, which is also pretty volatile, right? There's quite drastic changes in terms of demand patterns due to the Middle East situation, as well as supply situation is also different.

Currently it's still dynamic, it's changing all the time, I think we'll just charge according to supply and demand in the market and see what competition will be doing. I think we'll always look out for those kind of opportunity.

Okay. Thank you, Ronald.

Perhaps we can turn to a couple of questions online. We have a question from HSBC, it's about capacity.

The question goes: how are the capacity from the cancelled Middle East flights being deployed? Are they idling or are they flying?

We have been flying to two destinations only in the Middle East: Dubai and Riyadh. Each of those destinations, we had a daily frequency.

We're talking about two flights per day to the Middle East, it's not a huge number of flights that we are operating. Currently we've decided to suspend those flights until end of this month, 31st of March.

We are trying to deploy the capacity in the meantime to other popular routes. For example, we'll be adding a few more flights to London, and we'll be upgrading the aircraft currently we fly into Zurich to create a bit more capacity for our European customers.

Okay. Thank you.

Perhaps we'll take one more question from online to give some time to the physical audience to see whether they have a question. The next question is about another line of business, is on HK Express.

It's a few-part questions, we can maybe address them one by one. I think the first question is do you expect any delays for the delivery of your new fleets?

I think that's general across Cathay Pacific and UO. For UO, how do we differentiate ourselves from other LCC, such as Scoot or AirAsia?

Thank you.

In terms of fleet delivery for HK Express, we still have a number of orders. Remember we ordered 32 narrowbody aircraft between Cathay Pacific and HK Express, and they are going to start to arrive later this year.

For example, this year HK Express will be taking delivery of five such aircraft, and then more to come in '27, '28 onwards. Far, I think there's no major delay on these delivery, I think pretty much on time, I would say, by and large, with some small adjustments.

We don't expect any major issues when it comes to narrowbody fleet delivery. What was the second question?

Sorry, please?

The differentiation strategy. Okay.

Differentiation strategy. We work really hard on our fundamentals, we are very proud about our on-time performance, for example.

Last year's on-time performance of HK Express was 88%, a very high on-time performance, highly reliable. We are also very proud of our brand, is a very popular brand in Hong Kong and also in the Greater Bay Area.

We are getting a much popular presence among airlines in the Greater Bay Areas. In fact, among all the Greater Bay Area-based airline, we are the biggest in terms of cross-border flying to the rest of Asia.

In Hong Kong, we are also the second biggest airline based in Hong Kong after Cathay Pacific. Differentiation with other LCC, I think LCC have a number of best practice that we are learning from each other.

We respect those brands that has been mentioned by HSBC colleague. I think we continue to learn from other LCC, and other LCC I'm sure is learning from us as well.

I think we'll just keep that going. I believe the key advantage we have is that we not only have the Hong Kong market, but we have a very big Greater Bay Area market.

In fact, around 1/3 of our revenue for HK Express is already coming from the mainland cities of the Greater Bay Areas. That is the second largest point of sales after Hong Kong already, and it keep growing all the time.

I think that's one unique advantage, I would say, we have. Thank you.

Okay. Thank you.

We have a couple of questions on the passenger side of the business, maybe we can address it in one go. The question is: well, since the Middle East tension broke out, has passenger yield stopped declining, or is it normalizing?

Also, what's the demand for Cathay Pacific's looking like? Any variation by region?

Thank you.

I think it's still early days, but in the meantime, many of the Middle Eastern carrier has drastically reduced their operation, and therefore we have seen some short-term surge in demand on our flights. Like our flights between Hong Kong and Europe, in particular, has seen a surge in demand.

Our long-haul flights in the short runs are already very full, pretty full even before the conflict. Our room to take on new booking actually is limited, I would say.

The second question was...

By region. Were there any variation by region?

What's the Cathay Pacific business is looking like?

Again short-term I mentioned, European flight demand has seen a surge definitely. Other long-haul flights, right, has also seen some uptake in the short run.

For example, I think India market rely quite a lot to go through Middle East to go to the US, but now they can't, and some of that demand has been channelled to go via Hong Kong to the US, for example. Our US flights, for example, has also seen a surge in demand.

Australian flights, because some of them go through Middle East to go to Europe, and now they go through Hong Kong, more of them go through Hong Kong than before, and therefore our Australian flights are also in higher demand. Basically all the long-haul flights have seen a short-term uptake in demand.

It's short-term, it's changing by the day, I think we can't just count on that for the medium run, I think we will remain agile.

Okay. Thank you, Ronald.

I think we'll take one more question from online, which is actually a mirror question from the last one, but on cargo. The question was: can you talk a little bit more about your cargo business?

Do you see cargo yield normalizing? Is there any tailwind as a result of the Middle East disruption?

Thank you.

Thank you. Cargo yield has been normalizing over the past few years, and we believe that trend would continue.

Cargo market is very dynamic, right? The supply and demand is changing even faster than on the travel side.

I think it's really hard to say. We would go where our customer want us to go, and we will try to compete and capture demand effectively.

As you can see, I think the yield normalization has slowed down already last year, year-on-year. In terms of the short-term impact of the Middle Eastern situation to cargo, we haven't seen a major uptake because our flights from Hong Kong are pretty full already, we haven't seen a drastic change.

The more immediate impact is that we have a number of freighter flights that go to Europe with a stopover in Dubai for tech stop and uplifting more cargo. Because of the situation in Dubai, we're now skipping that stopover, and we are flying direct from Hong Kong to Europe with some payload restriction because we couldn't uplift fuel in between.

That's the small impact from a supply angle.

Okay. Thank you, Ronald.

Any questions from the room? If not, then thank you to our speaker, and thank you for joining us today.

That's all the time we have, and this concludes the briefing for today. If you have any further questions, please email them to [email protected].

Thank you, and have a good day.