Cathay Pacific Airways Ltd. has become the most-shorted major airline stock globally, as the aviation industry grapples with profitability challenges despite a surge in global tourism. As of August 12, short interest in the Hong Kong-based carrier’s shares surged to over 25% of its free float, according to S&P Global Inc. data. This makes it the highest among the 30-member Bloomberg World Airlines Index, surpassing American Airlines Group Inc.
Bearish sentiment towards Cathay Pacific intensified following its first-half results, which revealed a decline in net income due to lower passenger yields and rising costs. The broader airline industry is also facing earnings pressures, driven by staff shortages and overly ambitious expansion plans.
Analysts at Morgan Stanley noted that “negative earnings growth is not encouraging” and warned of ongoing “macro headwinds” for the remainder of the year. Cathay Pacific’s shares have fallen 5% year-to-date.