Cathay Pacific wins first 'buy' rating in 9 months with cargo haul, not passengers

(June 16): It took about nine months for Cathay Pacific Airways to win its first buy rating from an analyst. When the upgrade came, it was because of the airline’s cargo operations, not its five-star-rated passenger business.

Jefferies Group LLC raised the rating on Cathay’s stock to buy this month, citing signs of a pullback in capacity expansion and improved outlook for global cargo demand and yields. That’s a good start for the marquee brand, which said in May it would cut 600 jobs as part of the biggest revamp in two decades following the carrier’s first full-year loss since 2008.

“Our impression is it’s still difficult out there, but there are one or two signs that things are not as bad as they seem,” said Andrew Lee, a Hong Kong-based analyst at Jefferies. “One is air cargo,” with the other being cost-saving initiatives, he said in an interview, after raising the stock to buy from sell June 7.

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