Back-to-Back Annual Loss | Cathay Posts Worst Half Year Report

SHANGHAI: Cathay Pacific Airways Ltd on Wednesday, August 16, posted its worst first-half loss in at least 20 years and said did not expect conditions to improve for the rest of the year, as it continues to lose customers to mainland Chinese competitors.

The loss of HK$2.05 billion ($262.07 million) for the six months ended June, versus a profit of HK$353 million a year ago, puts the Hong Kong airline on track for its first ever back-to-back annual loss since it was founded in 1946.

Group revenue edged up 0.4 per cent to HK$45.9 billion, while passenger yields — the average fare paid per mile per customer — fell 5.2 per cent, Cathay said in a filing to the Hong Kong bourse. Yield on cargo services rose 4.4 per cent.

“We do not expect the operating environment in the second half of 2017 to improve materially,” Cathay Chairman John Slosar said in a statement.

“In particular, the passenger business will continue to be affected by strong competition from other airlines and our results are expected to be adversely affected by higher fuel prices and our fuel hedging positions,” he said.

The airline posted an annual loss last year for the first time since the global financial crisis as state-supported Chinese airlines chipped away at its market share, particularly on international routes to and from China.

Revenue passenger kilometres (RPK), a measure of traffic, grew by 1.4 per cent over the first half, its lowest growth rate since the turn of the decade save for the first half of 2013, according to BOCOM International analyst Geoffrey Cheng.

In comparison, China Southern Airlines’ RPK rose 12.49 per cent year-on-year over the same period, according to company data. Air China, which has a cross-shareholding with Cathay, reported RPK growth of 6.5 per cent.

Cathay is in the midst of a three-year reorganisation that includes its biggest headcount reductions in almost two decades.

It reshuffled its top leadership in April and is considering shifting some flights to its short-haul arm.

Last month, third-largest shareholder King board Chemical Holdings Ltd called on the airline’s founding Swire family to intervene to lead it out of “hard times”.

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