Morgan Stanley issued a research report stating that Cathay Pacific's (HK: 00293) passenger business is normalizing in August against a high base, while its cargo operations show resilience. The firm believes elevated jet fuel prices remain a key near-term headwind to the carrier's profitability.

The investment bank maintains an "Overweight" rating on the stock with a target price of HK$16.9.

In August, revenue passenger kilometers (RPK) grew 4% year-on-year, decelerating from a 6.6% increase in the prior month. Available seat kilometers expanded 3.4% year-on-year, compared to 5% growth previously. The passenger load factor held steady at a robust 87.2%, up 0.5 percentage points year-on-year.

Management noted that cargo demand has strengthened, supported by semiconductor shipments, pharmaceutical products, and inventory restocking needs. Looking ahead, management anticipates passenger demand to moderate seasonally in September before improving around the National Day Golden Week holiday. Cargo demand is expected to be buoyed by high-tech product launches and the traditional peak season.