Cathay Pacific Stock Hits 10-Year High on Profit Upgrade, But a Shadow Looms

Cathay Pacific's stock hits a 10-year high on a positive earnings forecast, but its budget airline HK Express faces challenges from weak demand in Japan, presenting a mixed outlook for investors.

Shares in surged to a on Tuesday after the Hong Kong carrier signaled higher earnings for 2025. While a 'strong' second half is fueling optimism for the flagship airline, its budget arm is being hit by turbulence from weak demand in Japan.

The Hong Kong flag carrier announced on that it expects a significant profit boost for the year, according to a report from Nikkei. This positive outlook is a direct result of a robust performance in the latter half of the year, likely driven by the continued recovery in premium and long-haul international travel.

But it's not all clear skies for the group. The company's budget subsidiary, , continues to struggle. The primary culprit is cited as 'weak Japan demand,' a headwind that reflects broader trends of slowing growth in Chinese tourism to the country.

For investors, 's soaring stock price is a bet on the sustained strength of the premium travel segment. The key question is whether this momentum can offset the weaknesses cropping up in more price-sensitive markets. The performance of serves as a barometer for regional economic health and geopolitical sensitivities, making the Japan route a critical indicator to watch for the group's overall stability.

PRISM Insight: Divergent Paths

Cathay's core business is riding the wave of a resilient premium travel boom, justifying the market's bullish sentiment. However, the underperformance of its budget arm, HK Express, highlights a key vulnerability to regional demand shocks, especially in the crucial Japan corridor. Investors must weigh the high-margin international strength against the low-cost regional weakness.

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