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Cathay posts US$262 million first half net loss as revenues rise 4pc

CATHAY Pacific Group has posted a first half net loss HK$2.05 billion (US$262 million), drawn on revenues of HK$45.85 billion, up four per cent.

The unsatisfactory performance was blamed on "intense competition, higher fuel prices, aggravated by wrong-way hedging as well as being adversely affected by strong Hong Kong dollar.

This compares to a net profit of HK$353 million for the same period in 2016 and a net loss of HK$928 million in the second six months of 2016.

"Structural changes within the airline industry continue to affect the operating environment for our airlines and created difficult operating conditions in the first half of 2017," said a company statement.

Nonetheless, cargo revenue improved, reflecting robust demand. Tonnage carried grew faster than capacity, and yield benefited from the resumption from April of fuel surcharges and improving demand for mainland China exports.

Demand for shipments within Asia was stronger and shipments on European routes grew. The group's cargo revenue in the first six months of 2017 was HK$10.51 billion, an increase of 11.7 per cent year on year.

Cathay Dragon increased 2.3 per cent. The load factor increased by four percentage points, to 66.2 per cent. Tonnage carried increased 11.5 per cent. Yield increased 4.4 per cent to HK$1.66.

"Our three-year corporate transformation programme has the goal of achieving returns above the cost of capital and of reducing our unit costs, excluding fuel. However, it is about more than just cost savings," said the company statement.

Passenger revenue in the first six months of 2017 was HK$32,105 million, a decrease of 3.9 per cent year on year. Capacity increased 1.1 per cent, reflecting the introduction of a route to Tel Aviv and increased frequencies on other routes.

Said Cathay chairman John Slosar: "We do not expect the operating environment in the second half of 2017 to improve. The new management team is acting decisively to deliver more to customers with improved productivity."