Morgan Stanley has released a research note indicating that Cathay Pacific (00293) saw its passenger traffic normalize in August against a high comparison base, while its cargo operations displayed resilience. The brokerage believes that elevated jet fuel prices remain a key near-term headwind for the airline's profitability.

The firm has reaffirmed its "Overweight" rating on Cathay Pacific with a target price of HK$16.9. In August, revenue passenger kilometers (RPK) grew 4% year-on-year, decelerating from the 6.6% growth recorded in the prior month. Available seat kilometers (ASK) also rose 3.4% year-on-year, following a 5% increase previously. The passenger load factor held steady at a robust 87.2%, marking a 0.5 percentage point improvement year-on-year.

Management has noted that cargo demand is strengthening, fueled by semiconductor shipments, pharmaceuticals, and inventory restocking needs. Looking ahead, the company anticipates a seasonal slowdown in passenger demand during September, with a rebound expected around the National Day Golden Week holiday. Cargo demand, however, is projected to stay supported by new high-tech product launches and the traditional peak season.