A detailed graphical exergy study based on the energy-utilization diagram (EUD) is applied to humid air turbine (HAT) cycle incorporated with a modified two-stage absorption heat transformer (TAHT). Employing the sensible and latent heat exchange modes in this TAHT and then introducing to the HAT cycle have clarified that this method can intensively recover the waste heat of HAT cycle and improve the system performance. Compared to a conventional HAT cycle, the overall cycle efficiency can be increased by 2 per cent points and the specific work can be increased by 7.3 per cent. Copyright (C) 2000 John Wiley & Sons, Ltd.