Cathay Pacific Airways suffered its sharpest single-day drop in share price since January 2021 after warning of declining airfares, mounting losses at its low-cost unit HK Express, and ongoing uncertainties in the global cargo market.

Shares of Hong Kong’s flagship carrier plummeted nearly 10% on Wednesday, closing at their lowest level since July 4—even as the broader Hang Seng Index gained 0.3%. The dramatic slide followed the airline’s cautious outlook despite reporting a modest profit increase for the first half of 2025.

Cathay reported a net income of HK$3.65 billion (US$465 million) for the first six months of the year—a 1% increase—powered by strong passenger numbers, falling fuel prices, and stable cargo performance. However, analysts pointed to weak underlying metrics that signaled tougher times ahead.

Passenger yields, often used as a gauge of average airfare levels, fell by 12.3 percent for Cathay’s mainline operations and plunged by 21.6 percent at budget carrier HK Express. The drop was attributed to growing competition and increased seat capacity across Asia-Pacific routes.

“HK Express continues to face short-term challenges,” Cathay Chairman Patrick Healy admitted during the earnings briefing, revealing that the low-cost airline posted a first-half loss of HK$524 million even before net finance charges and taxes. Despite this, Healy said Cathay remains optimistic that HK Express will eventually turn a profit.

The lukewarm results come as the airline pushes ahead with its post-pandemic expansion strategy. On Wednesday, Cathay confirmed it had placed an additional order for 14 Boeing 777-9 wide-body jets, bringing its total commitment for the long-haul aircraft to 35, with options for seven more. The move underscores the airline’s ambitions to reclaim its pre-COVID global reach.