Relaxation of U.S. Travel Restrictions Will Benefit Cathay Pacific More Than Mainland Airlines

We think Cathay Pacific will be the major beneficiary of this rule change--benefiting from more transit passengers traveling from the mainland to the U.S. Chinese airlines, however, are unlikely to reap benefits from the rule change due to capacity limits put in by the government. U.S.’ border easing represents potential upsides to near-term earnings but does not change our long-term assumptions. Therefore, we maintain our fair value estimates on airlines.