Cathay Pacific Airways Ltd
HKEX:293
Earnings Call Analysis
Q3-2023 Analysis
Cathay Pacific Airways Ltd
The company's rebuild journey encompasses four critical dimensions: people, fleet, capacity (flights), and financial outcomes. Stymied by the global aerospace industry's resource and supply chain challenges, the company has focused on staffing, aiming for a well-trained workforce. In 2023, training levels have soared to match pre-pandemic figures, and recruitment has grown the group's workforce by approximately 4,000 individuals. The organization values competitive remuneration, reinforcing this with tangible benefits like a special appreciation bonus equivalent to up to 6 weeks of pay and a profit-sharing scheme for 2023-2025.
The fleet has modestly expanded to 228 aircraft with a notable reduction in parked airplanes overseas, a sign of returning operational capacity. The aim for December 2023 is to reach about 70% of pre-pandemic passenger flight operations, covering around 80 destinations, and 85% for cargo capacity. They anticipate passenger numbers reaching 95% of pre-pandemic levels by year-end and have a strategy for route and flight allocation based on demand, profitability, and cargo opportunities.
The company invests in enhancing premium travel experiences, illustrated by a new partnership for improved in-flight dining and the reopening of all lounges except for one undergoing renovation. A refreshed global brand campaign aims to reconnect with customers as travel resumes. This investment is reflected in the doubling of flight operations compared to the prior year, with high load factors maintained even as travel demand fluctuates.
Cargo, a vital business component, has seen significant investments, such as solutions for refrigerated products and fresh produce. Despite these advancements, supply chain issues and environmental factors, like volcanic ash and snowstorms, have occasionally disrupted operations. However, the cargo division continues to win industry accolades, and overall capacity is increasing as passenger services are restored.
Lifestyle, the non-air travel pillar, has performed well, with Asia Miles gaining traction and new co-brand card partnerships extending the program's reach internationally. The focus on expanding the shopping proposition in popular travel regions strengthens this business line. HK Express, the low-cost carrier, is on track to surpass its 2019 flight levels by 130% by the end of 2023, signifying growth and network expansion.
Subsidiaries align their financial performances with the operational modalities they support, with cargo-oriented entities performing robustly. Associates, such as Air China and Air China Cargo, reflect similar trends, with Air China recently reporting profits. The company is also intent on being a sustainability leader, working on collaborative approaches and setting goals like using 10% sustainable aviation fuel by 2030 to reach net-zero carbon emissions by 2050.
With other airlines returning to profitability, the company has started to see improved financial performance, expecting to report a profit for the full year of 2023, marking the first profitable year since 2019. The group is taking steps to repay government preference shares and continuing its efforts to provide a strong travel demand outlook, despite facing global industry constraints. Looking forward, the company emphasizes its commitment to a successful rebuild by enhancing its fleet, supporting recruitment and training efforts, and focusing on sustainability and financial prudence.
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Good afternoon. Welcome to the Cathay Group's 2023 Q3 Analyst Briefing. Introducing our speakers for today, Chief Financial Officer; Ms. Rebecca Sharpe, Chief Customer and Commercial Officer, Ms. Lavinia Lau. We will begin the presentations by our speakers, followed by a Q&A session. Slides from the presentation will be displayed alongside the live video for your convenience. A copy of the slides has also been sent to you by e-mail. [Operator Instructions] I'd now like to invite Rebecca to begin the presentation.
Thank you, and good afternoon, everyone, and thank you for joining us today. For those of you who have joined us in previous analyst briefings, we're following a similar agenda. So although it's not a financial results briefing and therefore, we won't be talking about financial information specifically, we'll start by talking through our rebuild journey and the progress we're making. Then we'll provide some color on the 10-month results through to October in terms of operating performance. And then we'll finish with some information on outlook.
So if I start with the rebuild journey, we think about the rebuild journey in terms of a number of aspects, being people, fleet and then the resulting capacity or rather flights that we will generate through these 2 elements. And then, of course, the bottom line in terms of the financial dimension. And so those are the 4 elements we set out on this slide.
It's worth highlighting again that the entire aviation ecosystem, both here in Hong Kong and globally continues to face resourcing and supply chain challenges as we all rebuild across the globe. In terms of our people, if I start there, there are a number of different dimensions that we need to consider. We do have sufficient pilots, cabin crew and operational employees to support our current flight schedules. We do have a lot of training going on in support of this.
Our training activities this year are actually double what they were in 2022. So they're now equivalent to the levels we were operating in terms of training activity pre-pandemic. These levels are necessary as we continue to recertify people who haven't been flying through the pandemic and to support the promotions for people within our organization and, of course, to train all the new recruits that we've taken on through the years. We estimate that our group workforce will have increased by around 4,000 people through the course of 2023.
In terms of remuneration, which, of course, is another dimension that's important to everybody, we very much believe in this. It's part of our culture. Recognizing people for their support and commitment to the organization is very critical to us. So we're committed to being a competitive employer and to continually review the remuneration of our people to ensure they're recognized whilst also ensuring that as a business, we're sustainable and competitive in the long-term. We announced the special appreciation reward earlier this year, which was up to 6 weeks of eligible pay for our people.
And also, we announced the profit-sharing scheme that we introduced to cover the period from 2023 to 2025. So both of these, the different dimensions of the remuneration we've had made -- changes we've made through 2023. So overall, we're confident that our training and ongoing recruitment plans will ensure we continue to have sufficient resources as we work towards fully rebuilding the organization. If I then touch a little bit on the fleet, you'll see from the numbers here at the end of October, we had 228 aircraft in our fleet. That's just 3 more than we had at June when we did the interim results briefing.
For those who are sharp eyed amongst you, the number you'll notice that has changed the most is the aircraft parked overseas. So that has gone down from 25 to 13 now. And this, of course, is part of our journey as we progressively bring back these aircraft to the fleet to operate. And then in terms of new deliveries, lease returns, we include those numbers for your reference here, too.
The financial information I'll cover a little bit later. And then on the next slide, we'll talk about flights. So in terms of being on track with our rebuilding, what does this mean? We, as a group, comprising Cathay Pacific, which is our premium airline and HK Express, our low-cost carrier. We're on track to achieving our 2023 target that we set towards the end of last year. In December 2023, we expect to operate approximately 70% of our pre-pandemic passenger flights, covering about 80 destinations and on the cargo side, about 85% of capacity. Maybe if I just give that a little bit more color. In terms of satisfying post-pandemic travel demand, our priority has very much been on, first and foremost, on the passengers who want to travel or Hong Kong people who want to travel out of Hong Kong to different destinations and for visitors coming to Hong Kong. And in these 2 directions, if we look at those specifically, we anticipate that we will be back to about 95% of pre-pandemic passenger numbers by the end of 2023. As we further rebuild, we will add more transit traffic via the Hong Kong hub as well.
A number of you have asked me before, how we go about -- how do we decide which flights, which routes to add. And so a little bit of color on this aspect, too, we try to find the right balance between a number of different perspectives. So we think about demand and profitability. We think about capturing cargo opportunities as things change in the cargo market. We balance our resource deployment. Obviously, you've got different aircraft types that have different pilots operating them -- different aircraft themselves. And of course, we're all looking to optimize flight patterns and think about our schedule integrity.
So there are a number of different aspects. Again, I share for your reference to give you a bit of color behind how we are going about this process. The next couple of slides we've included are the financial slides. They're the same as the ones we included in the interim briefing, but I include them here for easy reference as we've not published liquidity information since the half year. But our liquidity level at 30th of June was HKD 28.9 billion, made up of liquid funds of HKD 24.1 billion and our undrawn facilities at that point in time of HKD 4.8 billion.
As I think I have mentioned before, these were elevated levels compared to historically what we held in the form of liquidity, and that was the prudent measured approach that we adopted throughout the pandemic. As we've already announced, we intend to redeem 50% of the preference shares that the government invested in us in late 2020. And that's in the amount of HKD 9.75 billion and this will have an impact on the liquidity level as we actually make the payment. I've also included here fuel and interest cost information. Again, it's not different from the interim results, but I know people often ask about our fuel hedging. And so I include it here together with the fixed and floating interest rate mix that we have.
I can also confirm that we do continue to follow our fuel hedging policy. There's been no change since we last spoke about this. But just as a reminder, this has a clear pricing matrix, which governs the hedges we make, is based on the forecast fuel consumption and the prevailing price of fuel, and we continue to execute in accordance with that. So for example, you can see at 30th of June for the third quarter of this year, we are projecting that we had just a bit more than 30% of our fuel consumption hedged at that point in time.
In terms of interest rates, we mitigate our exposure to interest rate changes by having some of it in fixed rate and some of it floating. And at the end of June, this amount of fixed was 44%. So those are just a reminder of those aspects just because I know quite a few of you like referring to them.
And now I'll pass over to Lavinia to take us through the October year-to-date operating performance.
Thank you, Rebecca. So in the next few 10 minutes or so, let me walk you through the operating performance of our 4 different lines of business. So starting with our premium travel, Cathay Pacific. So year-to-date, we have taken delivery of 6 new aircraft already, and there will be one more coming in December, and that will be an A350-900. So that aircraft is very important. That's because it marks the end of our batch of Airbus 350 orders, which started all the way from 2016. So with this latest delivery, we will have completed that order of 48 aircraft.
On top of aircraft, we continue to invest in all aspects of our brand and customer experience. So I think in the last update back in August, we unveiled our new business class product, Aria Suite, which will come into operation by the second quarter of next year. So whilst waiting for that, we have not been really stopping down. We continue to invest a lot in our customer experience. So for example, within the cabin, for those of you who have been flying recently, you should have noticed that we are continuing to enhancing our dining proposition in flight.
So in business class, recently, we have added Chinese soup. And also, for example, clay pot rice, so which have been very popular. And just yesterday, we have announced our new partnership with the Pirata Group, which will provide our premium economy passengers with very homemade Italian cuisine when they travel with us. So these are some of the ongoing dining investments that we are making.
In terms of lounges, I think all our frequent fliers are very pleased that by August, we have already resumed all our lounges, except the one in Paris CDG, where -- which is still closed because of airport renovation. So having all our lounges resume is a very important part for our elite members and all our frequent travelers.
And apart from investment in [ hot ] products, we also continue to invest in our brand because, obviously, brand is a very important long-term investment for us. We haven't really been doing a global brand investment for a few years now since the pandemic. But now we think really is the right time to retell the Cathay story to the world. So I'm not sure if every one of you have seen our global campaign, it feels good to move, which was launched in September. In case you have not done so, I would just like to spend 30 seconds to show a trimmed version for you.
[Presentation]
So our brand purpose is to move people forward in life, and I hope you can see that being captured in this particular campaign. So apart from rolling out in Hong Kong, we are now progressively rolling a similar campaign in other parts of our key network as well. So in terms of actual performance, as you can see -- as you can expect, our passengers number continue to improve as we continue to add more flights back into our network.
So for the month of October, Cathay Pacific, we actually operate more than 7,000 flight sectors, which is more than doubling that of what we had been operating by the end of last year. In terms of destinations, our Cathay Pacific alone will be -- we have added 8 more destinations since the beginning of this year, and we'll end the year with around 66.
As we continued to add more flights back to the system, I think it's pleased to know that we continue to maintain a pretty high load factor. So I think in the summer peak, the loads up were particularly high, and since [indiscernible] has softened somewhat, but still, if we look at the first 4 months of the second quarter, we are still seeing a pretty high load factor of 86%, compared to pre-pandemic, it is still a very pleased result.
Then turning into cargo. So similar to premium travel, again, we continue to invest both in terms of our solutions for our customers and also in our brand. I think in the last time, I also talked about the different special solutions that we have been investing in, whether it's in, for example, refrigerated products, fresh produce. And then recently, we have also invested a lot in the mail solution as well. We have brought us new opportunities. And in terms of the brand, we know how that particular campaign had also received very good response from our customers globally.
And on top of that, we are really very pleased to know that, as you can see from this slide, throughout this year, we have been receiving different awards from very prestigious publications and organizations from around the world. I think this is a very good recognition of all the efforts that our cargo teams have put in to really deliver what we want to, with our customers. So for cargo, in terms of capacity, as you know, we have always been operating our full freighter capacity even during the pandemic years. But now as our passenger network continue to rebuild, obviously, the belly capacity part of that formula also starts to kick in.
And so overall, our cargo capacity has continued to rebuild this year. In terms of with that increase in our capacity, we are also carrying more tonnage compared with last year. But I do want to mention a point that in the past couple of months, we do continue to see ongoing supply chain challenges, whether it's actual engineering resources or spare parts, which sometimes lead to some ad-hoc cancellations which could not really be avoided. And recently, we have also seen some weather challenges, whether it's volcanic ash or snowstorm in anchorage, which unfortunately caused us to cancel supplies.
But overall, we are continuing to grow our cargo capacity. So as I mentioned, overall, the cargo demand has softened a little bit. But in terms of overall, our demand is still much higher than pre-pandemic times. So in terms of load factor, you can see that just for the first 4 months of the second half, we still stand above 60%. But obviously, as you know, the cargo peak has only started from October. So in November and December, we do expect the load factors to push up a bit and that will enhance the overall second half load factor.
Then moving to our third line of business, Lifestyle, which is the non-air part. So in this pillar, there are 2 main portions. So the anchor program under Lifestyle is still our Asia Miles reward currency. And on that part, I'm pleased to say that overall, the Asia Miles currency continues to grow. And in the past few months, we have seen very good performance, especially from the payment pillar together with our different bank partners, including our own co-brand card and other conversion partners, we have run different campaigns in the past few months and that are bringing good [ mall-ish ] sales.
And other than that, we continue to expand our partnership in the other areas as well to support the overall program proposition. We are also expanding our footprint outside Hong Kong. So for example, just recently, we have announced our partnership with Neo Financial, which is a fintech company, a start-up in Canada. So this is the first time we actually partnered with a start-up to introduce a co-brand card, and we expect that will provide a very good digital experience to our members.
Other than that, we are also expanding our shopping proposition within the region. So knowing how keen our members, especially those in Hong Kong, love to travel around the region, we have sought partners in popular places, for example, Japan, Korea and Bangkok and allowing them to often [ miles ] when our members shop with them. So overall, our proposition outside Hong Kong is being continuously enhanced as well. So apart from [ mall-ish ] sales, we also continue to raise our profile in the product sales side. So if you go to our Cafe shop, you'll see that we have introduced more of our Cafe branded merchandise. [indiscernible], middle of the festival, we have our own mooncakes as well. So we will continue to expand that line of business as well.
Also, we have also partnered with some of our travel insurance partners to offer some interest products, which are very relevant to our partners. So for example, we have recently introduced an annual insurance coverage, which allow unlimited travel for our members during a particular insurance year. So all this, hopefully, will continue to allow us to build closer ties with our members on a day-to-day basis.
So last but not least, the fourth pillar within our portfolio is HK Express, our low-cost travel carrier. So similar to Cathay Pacific I think, HK Express continues to work very hard in building their flight frequencies. So in fact, they are set up a target to reach 130% of the [ 2019 ] flight levels by the end of 2023, and they are really on track to achieving that. They also continue to expand the network for those of you who love traveling to Japan, you noticed that they have been adding back a lot of the secondary destinations in Japan already.
And in terms of aircraft, they have just taken delivery of the second brand-new Airbus A321 new aircraft, and there will be 2 more to come within the year. They have also just celebrated their 10 years anniversary, which is a very great milestone. And in terms of destinations, I just mentioned, they are continuing to add. In October, they have added a new point in Manila and also just recently, they have announced that actually, they will be expanding their footprint in Chinese Mainland as well with the addition of Beijing Daxing Airport from January next year, which is a good thing as obviously, Chinese Mainland is a very important market. And this will be the -- Beijing Daxing will be the second destination there after Ningbo. So I think this gives some flavors of how we are doing in the 4 different lines of business.
And with that, I'll pass back to Rebecca.
Thank you, Lavinia. So Lavinia has covered the 4 lines of business. So if I now touch on briefly the subsidiaries and associates on this slide. As has been the case throughout the whole pandemic and the rebuild, the operational performance of our subsidiaries generally reflects the nature of the business they support. So if they're more closely aligned with the cargo story, their numbers have typically been more aligned with cargo results and on the passenger side, then more aligned with the passenger results.
This is also the case for a large extent, for our major associates being Air China and Air China Cargo. So just a reminder that we incorporate these 2 companies' results 3 months in arrears. So the period 1st of October 2022 to the 30th of September 2023 is the period that will be incorporated in our full year results for 2023. Air China publishes quarterly information. And so you may have recently seen their publication for Q3 2023, in which they reported a profit for the third quarter.
The final slide in this section is about our sustainability journey, which, for the aviation industry is extremely challenging. We believe -- I think I've mentioned before, but we believe that progress can only really be made in this area by working together with governments, industry bodies, suppliers, customers, partners and also other airlines. And we're endeavoring to do this as part of our journey. As part of our sustainable development strategy, we continue to raise ESG-linked financing on the deliveries and purchases of our aircraft. And as part of our journey and ambition to be a sustainability leader rather, it's good to be able to share that we've received a number of awards recently, including the best practice ESG and Best ESG report awards from the TVB ESG Award and the distinction award of the Hong Kong Management Association Sustainability Award 2023.
The other topic I would like to cover in conjunction with our sustainability journey is sustainable aviation fuel. As some of you may be aware, sustainable aviation fuel was mentioned in the recent policy address for the first time, and we very much support the Hong Kong SAR government intention to drive the use of Sustainable Aviation Fuel or SAF. We refer to it in short, in Hong Kong. And maybe I'll just explain very briefly why we support this. So in order to achieve our goal of net zero carbon emissions by 2050, there are a number of key levers that the aviation industry will use in order to achieve this goal. They include more fuel-efficient planes.
So as we purchase more new aircraft, that obviously contributes to reducing our carbon footprint. It includes operational efficiencies that can be done and also new technologies, although these may be somewhat further away. But the use of SAF will be the most important lever for Cathay in order to connect Hong Kong as our hub to the Americas, to Southwest Pacific and to Europe, the long-haul markets effectively. And so that's why we've set an ambitious target to make use of 10% SAF on our flights by 2030 as an important step in our goal of 2050 net zero carbon emissions. But this ambitious target can't be achieved by Cathay alone.
The only way we may be successful is for other key stakeholders to take action also, so including policymakers, the supply chain as well as customers. Thus, we're very supportive of initiatives that are introduced that will promote the use of SAF and help develop the related supply chain. And we do look forward to the development of further positive policies relating to SAF in the future.
Moving on to some commentary on outlook. So starting with financial results. As you'll be aware, many other airlines have reported good results. And we can see the sector as a whole, the industry as a whole is returning to profitability. For us, you'll remember that as a Cathay Pacific Group, our rebuild journey started that a bit later than our industry peers. And you'll recall that in the first half of this year, we reported a consolidated profit of HKD 4.3 billion. The strong performance in the first half of this year from the airline and subsidiaries has continued into the second half.
The results from associates, as I noted earlier, have improved, although overall, for that 12-month period from 1st of October to 30th of September, that we include will still be a loss overall. However, with respect to the Group consolidated picture, so taking the airline and subs plus the associates, we expect that the second half of this year at the Group consolidated level will be a profitable result that will surpass the first half Group consolidated result. And therefore, overall, for 2023, we expect to deliver a profit. This will be the first profitable year for us since 2019.
With respect to the financial aspect of the rebuild journey, that we announced -- you'll recall we announced earlier that we intend to redeem all of the 19.5 billion preference shares that the government invested in us in 2020, and that we will try to do that by July 2024. We also announced the mechanism that we've used in order to do this and that, that would be by way of capital reduction. So the capital reduction was approved at the Extraordinary General Meeting on the 11th of October, and it was completed earlier this month. So that's the first step in the process of the redemption.
We, therefore can now go ahead and buy back 50% of the preference shares as planned in the amount of HKD 9.75 billion next month. And the plan remains in place to redeem the remaining 50% by the end of July 2024, obviously subject to operating performance and the market conditions. Additionally, for your reference, we have paid a total of HKD 1.8 billion in preference share dividends this year-to-date. We remain very grateful of course, to -- for the support of our shareholders through the pandemic and subsequently, and to the government that for their help during our most difficult point in our history.
If I now look a little bit of outlook for the travel side of our business or the passenger part, demand continues to be very strong. The whole aviation ecosystem, both here and globally continues to face constraints, which is interplaying with that strong demand. And as I stated at the start, as a group comprising Cathay Pacific, our premium airline and HK Express, the low-cost carrier, we are on track to achieving our 2023 rebuild target set out late last year. In December '23, we expect to operate the 70% of our pre-pandemic passenger flights covering about 80 destinations. In 2024, we'll continue to work on -- towards fully rebuilding our flights.
Now as I've mentioned a couple of times, this is happening in the context of various constraints that are infecting the entire global aviation industry, notably the recruitment and training of customer-facing employees and supply chain challenges. We have leveraged the Hong Kong SAR government's labor importation scheme for the aviation industry and undertaken targeted approaches to mitigate these issues that we're facing, but we do not underestimate the magnitude of this challenge. We are turning on all the taps to recruit people to support our rebuilding journey. We began recruiting in 2022. You might have mentioned that when I've done these presentations before, we talked about beginning to recruit people last year.
And we've grown our Group workforce by around 4,000 or will have done by the end of 2023. We plan to continue to grow the Group workforce by more than 5,000 people next year, a further roughly 25% from where we are now. And additionally, for your interest, we've taken back or welcomed back close to 2,000 people who were previous Cathay Group employees who decided to return to the company and help support our rebuild journey. Now of course, we need to train all these people. So our training activities, I mentioned earlier, are more than doubled than 2022 levels this year. And next year, they'll double again in terms of compared to 2023.
We've been rapidly ramping up training capacity as a result of meeting this demand for training. That's included things like more instructors, more training classes, including classes in the evenings and weekends. We secured more simulator resources and are operating more simulator events. And we're doing all this whilst also ensuring that the very high standards of our training that we operate to are maintained. So another sort of slight different dimension, that's sort of the people and the training.
In terms of the destinations, we have resumed the cargo route that was last month and Colombo and Chennai will be resumed early next year, and we'll be operating a seasonal service to Christchurch starting next month. And Lavinia talked about the investment in lounges earlier. The most recent investment in lounges is our lounge at Shekou. Now this is our first lounge that's not at an airport. So it underlines our commitment to becoming a leading premium international carrier of choice in the Greater Bay Area because it's a land [indiscernible].
If I then talk a little bit about cargo. As our passenger network rebuilds, of course, this will progressively increase the capacity for cargo such that we expect to reach 85% of pre-pandemic levels by the end of this year. However, we do anticipate the supply chain and weather challenges that Lavinia alluded to earlier, continuing to affect the capacity as we go forward. The cargo market dynamics are changeable, being more closely linked to the global economy. So we see demand changing amongst the different sectors that we serve. For example, e-commerce remains a bright spot for us.
Our approach, therefore, is to be as flexible as possible to adapt to these changes such that we can optimize our schedules accordingly. So finally, if I summarize, try and capture in one slide, everything we talked about for the past 20 or so minutes. We are on track and committed to our rebuild journey, and we're doing more than just returning to where we were pre-pandemic. We're looking to build a better cafe than we had before. We do acknowledge there will be challenges along the way, but we believe that our measured and responsible approach is our route to success.
As I said at the start of the presentation and as we capture on this slide, there's a number of aspects to our rebuild. And key to that is our people and our fleet. I won't repeat what I said a few minutes ago, but we really are pulling out all the stops to deliver the recruitment and training targets necessary to fully rebuild. Also, you can see on this slide, we've included, for easy reference, the new aircraft we have on order. I'm often asked about this. It is in line with the interim report, but we've also now announced the 32 narrow-body aircraft. So you can see that this means we have 72 new aircraft joining our fleet progressively over the next few years.
And in terms of financial outcomes, we'll continue to repay or rather pay the preference share dividends as they fall due. We intend to buy back the 50% of the preference share at HKD 9.75 billion next month and the remainder by the end of 2024, subject to market conditions, and we expect to generate a consolidated profit for the year as a whole, which will be the first profitable year since 2019. And with that, I'll pause, and I think we can open up for questions. Thank you.
Thank you, Rebecca and Lavinia, for your presentations. We'll now hand over to our moderator, General Manager, Corporate Affairs, Andy Wong, to begin the Q&A session.
Thank you. We have received a number of questions from our online audience. The first one coming from DBS Bank. It's a 2-part question. So part 1, please share some color on the higher net profits expected in the second half of 2023 compared to the first half.
Thank you for your question. So maybe just a little bit more color. In terms of when we think about our consolidated profit, we look at the sort of 2 aspects to it. So we think about the airline plus subsidiaries, and we think about the associates, which are quite significant in our numbers. And those are the 2 sort of dimensions. So from an airline and subsidiaries perspective, the first half strong performance will continue into the second half. And then at the associates level, the overall loss for the year, we're anticipating to be a loss, rather, the overall result. But we -- as I noted, and you can refer to in the published documents that are available, the quarter 3 for Air China was a profit. So we're expecting that, that will be by default a stronger result. But overall, yes, we're expecting a consolidated profit for the full year.
So moving on to Part 2 is on workforce. So what is the workforce now compared to 2019? And is the Group still ramping up hiring aggressively?
The workforce numbers now -- I don't know specifically off the top of my head, the absolute number. But in terms of, yes, ramping up, we are. I think as you heard me talk about through the presentation for the whole of 2023, we will have added approximately 4,000 people to our workforce and which is a step change of roughly about 20%, I think, from last year. And then we have plans to recruit and add rather another 5,000 approximately -- slightly more than 5,000 for 2024. So yes, we've got plans to significantly continue to increase the workforce from the start we made in 2022.
Next question is from Bloomberg Intelligence is on the preference shares. So the question was, should we interpret with the first 50% of the redemption of the preference shares at HKD 10 billion and liquidity at HKD 30 billion. So the company is returning to more normal pre-pandemic liquidity at about HKD 20 billion, i.e., HKD 15 billion cash and HKD 5 billion on undrawn facilities.
Thank you. That's a very mathematical question. I can't obviously talk about specific numbers that have not been published. But yes, if you sort of look back through our historical numbers, you'll see that we do carry liquidity at lower levels than we did through the pandemic. And at June, the liquidity number at HKD 28.9 billion and then HKD 9.75 billion to pay in the preference shares. The intention, I think I've mentioned before is to bring down the liquidity levels to more typical levels as the operating conditions continue. So whilst I can't specifically confirm your precise calculations, overall, I can say, yes, the intention is to reduce liquidity levels and part of the repayment of the preference shares, we'll do that.
Next question, moving on to the cargo side of our business. So the question was much has been made of the fact that cargo use is still high compared to pre-COVID levels, even though they are down significantly in 2023. Does management consider in forward planning that cargo use can stabilize at these high levels or will continue normalizing towards the 2019 pricing? In terms of volume, do contracted levels at the first quarter of 2024 show historical pattern of a drop because it's post Christmas or a different demand profile?
Thank you for the question. Obviously, cargo use is always a topic of interest for our analysts. What I can say is, yes, like you have mentioned or as I've shown in the slides, cargo use have generally softened from the heights of 2021 and 2022. But I'll have to say that they are still higher than what we had got in 2019. So going forward, I wish I have a crystal ball, but I don't have one. So I guess what we can only say is that we will focus on what we plan to do in terms of maintaining or actually pushing our use. So as I've mentioned, so in the past couple of years, we have been investing heavily in our special solutions, which obviously come on higher yield than general cargo. So these include temperature sensitive, handling sensitive, time-sensitive cargo solutions.
So we'll continue to focus on this so as to maintain our yield going forward. But just on this particular peak, like we have entered into the peak season, I can say that even though we've expected our use to continue to soften, actually, this particular peak season, especially in the past couple of weeks, we do see a pleasant surprise in terms of the overall demand, especially from the e-commerce goods, which have been strong for a while, but particularly strong during this peak. So that actually brings some good news to our over cargo demand. So hopefully, that momentum will continue. But also, like I said, we will continue to work on what we can control, which is to continue to focus on special solutions and continue to promote our brand.
Thank you, Lavinia, staying with you, if I may. Next question is on passenger side of the business. It's mainly on the Chinese Mainland carrier. So the question was Chinese Mainland carriers upcoming winter and spring schedule, we will see high international capacity deployment, anticipated to be around 70% of the 2019 levels. So the question is, have you seen forward passenger yield softening?
So Hong Kong's role is to be an international aviation hub. And we are also here to act as the gateway between Chinese Mainland and the rest of the world. So yes, I think when direct capacity between Chinese Mainland and [indiscernible] world, especially U.S. recently, have not recovered yet to full capacity. We have seen that Hong Kong has been benefiting from that. And obviously, we as the home carrier, we are also carrying a lot of these connecting traffic from Chinese Mainland to other parts of the world and also vice versa, reversed back into Chinese Mainland.
So yes, if the capacity -- direct capacity continues to build up between Mainland and rest of the world, definitely, there will be an impact on our yield. But we also have a lot of other traffic flows that we can tap on to from Southeast Asia, from [indiscernible] to the rest of the world. So well, whether that will have -- I think that will have an impact on our overall traffic mix. But in terms of actual impact to yield, I don't think I can specify at this particular point. But obviously, we are very closely watching all these movements in Chinese Mainland and we'll continue to adjust our own pricing and inventory policies accordingly.
Next question on dividend. A short question. So do you consider resuming the dividend for ordinary shares?
Thank you for the question. We're grateful to the Hong Kong SAR government and our shareholders for their support during -- in particular, with the recapitalization and during and post the pandemic. We've paid HKD 1.8 billion this year in preference share dividends. And next month, we'll buy back 50% of the preference shares in the amount of HKD 9.75 billion. So we will consider paying dividends for the ordinary shares at the appropriate time, subject to the operating environment and our financial performance.
Thank you. Okay. Next, I think we can lump the 2 questions together. It's very much on fairs and also customer experience. So the question was, how is the ticket price trend into the summer of 2024? Is it possible to see a decline on a year-to-year basis? And the second question, I think is very close to heart to many of our passengers. So a question to Lavinia. Are there plans to expand the complementary WiFi beyond the first class in the near future?
Okay. So let me address the first question first, which is everyone's favorite, I got that question every time I speak with the media or the analysts. So -- but I have to repeat that in terms of fares. The way I see it, there are 2 different components actually what drives the current fare levels. Firstly, is the overall supply and demand. So at this point, I think, overall, even though we are ramping up very quickly, overall, we are seeing demand larger and supply. But that will continue to normalize or balance out, as I've just mentioned, or Rebecca and I have both mentioned, we are continuing to adding back more and more of our flights. So by the end of this year, it will be 70% already and we'll continue to rebuild next year.
So as there is more and more supply and demand balance, I'm sure on that part of the formula, the pace will continue to normalize a bit. But I think it's very important also to remember there's a second element to the whole fare question. And this is actually the cost of offering these services. I think over the last couple of years and very obviously, that we can see post-pandemic, there have been inflation really along the entire aviation supply chain. So from all of our suppliers, whether it's our catering suppliers, engineering suppliers, drug handling suppliers, so -- and all of them are actually -- of course, all of them have different challenges within their own [indiscernible]. And a lot of them actually then are reflected in cost escalations to the airlines.
I don't think this is just for Cathay when I talk to my counterparts in other occasions, I think this is a global issue, global resource and supply chain issues, which is becoming a challenge for all of us. So I think as long as these cost escalations continue to be there, I think we have to factor those in, in our overall cost. But yes, too early to tell [indiscernible] the 2024 prices will be. But I'll just have you maybe remind everyone that it's always -- we always tend to -- we'll always remain competitive in the market. At the end, we are a commercial airline. So there will always be good news in the market. Like now, November is traditional nonpeak season. So if you go buy some tickets now, I'm sure there will be very good deals around.
So the follow-up question was on WiFi.
Sorry, I missed that part. WiFi, yes, obviously, we'll continue to look at WiFi very seriously because this is something that our customers, especially our premium customers tell us it's very important part, even though a lot of people might have preferred that we never introduced WiFi in the first place, but now that is in there. Yes, there's always this question as to whether we will extend our complementary WiFi to other passengers. So right now, we do offer complementary WiFi, but only to our first-class passengers.
So going forward, we will definitely study the opportunity or the on the -- whether -- how we can actually extend our WiFi proposition. But I think this -- but this needs to be really a very careful decision because our investment in WiFi is not a small amount. And we also want to ensure that if we want to extend that complementary service, we need to make sure that the performance level of WiFi is satisfactory. So I think -- so I think the short answer is, yes, we will continue to study. But I don't have any further details to share right now in terms of how wide we will make our complementary WiFi become?
We have time for a couple more questions. So one is on parked aircraft. So as we are bringing back a lot of the parked aircrafts, are they actually going to be in the fleet flying operating? Or are they going to be parked elsewhere outside of Hong Kong?
The parked aircraft that are being brought back to Hong Kong are being brought back to be operated. So they will all be flying and we'll continue to progressively reduce the number. So I think on the slide we showed, we've still got 13 aircraft parked overseas. And that will continue to progressively reduce over the next few months. But yes, the ones we bring back are maintained and then they fly again.
Rebecca. So maybe last question, I believe there are questions on trying to clarify on the 95% of the passengers that we carried. So the question is how can we achieve 95% of the packs being carried by end 2023? And now it's only 60%. So I believe we need a little bit more elaboration on the numbers.
Okay. Maybe I can give it a go, and Lavinia can supplement as necessary. So the -- when we're looking at this to provide a bit more extra color for people, when we're talking about the 95%, we're talking specifically about passengers who fly out of Hong Kong. So Hong Kong-based people potentially and visitors that fly into Hong Kong.
So in addition to that, you have passengers that are transiting. So if we look at that group of passengers specifically, the ones that are flying out of Hong Kong and into Hong Kong and their destination or start point is Hong Kong, then that is the group of passengers that's 95% of 2019. But on top of that, you have transit passengers. So as I said earlier, the number there, the percentage there is smaller, but we're gradually adding that back as we rebuild.
That's all the time we have. Thank you to our speakers and moderator, and thank you for all your questions. This concludes today's webcast. A copy of the presentation slides will be available to download on the Investor Relations page of our website later. If you have any further questions, please e-mail them to ir@cathaypacific.com. Thank you for joining us. Have a good day.
Thank you.